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iifiSITY   OF    PENNSYLVANIA 


I  INDUSTRIAL  ACCIDENTS 

AN?> 

XRKMEN'S   COMPENSATION 


BY 


RALPH  HARRUB  BLANCHAttD 


A  THESIS 

H-  Faculty  of  the  Graduate  'Soliooi  in  Partial  Fulfillment 
•  r!u-  iC'iquirorneniy  for  the  Degree  of  Doctor  of  Philosophy 


UC-NRLF 


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CO 

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TON  AND  COMPANY 
LONDON 


EXCHANGE 


A 


UNIVERSITY  OF  PENNSYLVANIA 

INDUSTRIAL  ACCIDENTS 

AND 

WORKMEN'S   COMPENSATION 


BY 
RALPH  HARRUB  BLANCHARD 


n-^o  ic, 

A  THESIS 

Presented  to  the  Faculty  of  the  Graduate  School  in  Partial  Fulfillment 
of  the  Requirements  for  the  Degree  of  Doctor  of  Philosophy 


D.  APPLETON  AND  COMPANY 

NEW  YORK  LONDON 

1917 


COPYRIGHT,  1917,  BY 
D.  APPLETON  AND  COMPANY 


Printed  in  the  United  States  of  America 


PART  I 

INDUSTRIAL  ACCIDENTS  AND  THEIR 
PREVENTION 


381375 


CHAPTER  I 
INDUSTRIAL  ACCIDENTS 

Industrial  accidents,  those  accidents  occurring  to 
an  employee  during  his  working  hours,  create  the 
problems  of  which  the  systems  of  Employers'  Liability 
and  Workmen's  Compensation  are  attempted  solu- 
tions. 

The  Extent  of  Industrial  Accidents. — It  has  been 
estimated  by  Dr.  Frederick  L.  Hoffman  that  there  oc- 
curred in  the  United  States,  during  the  year  1913, 
700,000  industrial  accidents,  involving  a  disability 
period  of  over  four  weeks  and  25,000  which  termi- 
nated fatally.1  In  the  metal  and  miscellaneous  min- 
eral mines  of  the  United  States  the  statistics  of  acci- 
dents for  the  year  1913  are  as  follows :  2 

Per   1000 
Number          employed 

Fatally  injured. "ft 683  3.54 

Seriously  injured  (loss  of  20  days  or 

more)  5,890  30-5° 

Slightly  injured  (loss  of  over  one 

and  less  than  20  days) 27,081  140.25 

The  mining  industry  is  of  an  extremely  hazardous  na- 
ture and  the  accident  frequency  among  its  employees 

1  Industrial  Accident  Statistics,  p.  6. 

2U.  S.  Bureau  of  Mines,  Technical  Paper  94,  p.  27. 

3 


4  COMPENSATION  INSURANCE 

is  higher  than  in  any  other.  In  two  other  dangerous 
industries  for  which  we  have  statistics  for  the 
entire  country  the  following  tables  have  been  com- 
piled : 

ACCIDENTS  TO  EMPLOYEES  OF  STEAM   RAILWAYS  YEAR 
ENDING  JUNE  30,  I9I53 

Per  1000 
Number          employed 

Killed 2,152  1.49 

Injured   138,092  88.64 


ACCIDENTS  IN  155  IRON  AND  STEEL  PLANTS  YEAR  END- 
ING JUNE  30,  1910* 

Per  1000  300- 
Number          day  workers 

Fatal 274  1.86 

Permanent  injury 400  2.72 

Temporary    disability     (one    day 

and  over) 35>3^4  240.6 

Total    36,038  245.2 

Unfortunately  we  have  no  statistics  to  show  the 
number  of  industrial  accidents  throughout  the  United 
States  in  other  industries  but  certain  of  the  indi- 
vidual states  have  gathered  valuable  data  from  which 
the  following  table  is  cited  as  especially  signif- 
icant : 

3  Interstate  Commerce  Commission,  Accident  Bulletin  No.  56, 
P.  23. 

4  Report  on  Conditions  of  Employment  in  the  Iron  and  Steel 
Industry  in  the  United  States,  Vol.  IV,  p.  43. 


INDUSTRIAL  ACCIDENTS  5 

INDUSTRIAL   ACCIDENTS    IN    MASSACHUSETTS    FOR   THE 
YEAR  ENDING  JUNE  30,  iQH5 

Fatal  accidents 509 

Non- fatal  accidents , 96,382 

Total  96,891 

Rates  per  1000  employees : 

Automobile  factories 287. 

Box  makers  (wood) 137. 

Car  and  railroad  shops 100. 

Cotton  mills 67. 

Boots  and  shoes 54. 

Clothing   makers 22. 

Average  for  25  selected  industries 102.85 

Further  citations  would  only  serve  to  emphasize  the 
fact  which  the  above  figures  clearly  indicate,  that  in- 
dustrial accidents  play  no  inconsiderable  part  in  the 
conduct  of  modern  business,  and  are  sufficiently  nu- 
merous to  warrant  careful  study  with  a  view  to  elimi- 
nating them  or  mitigating  their  consequences.  Such  a 
study  should  proceed  first  in  the  direction  of  a  de- 
termination of  the  economic  loss  occasioned  by  them. 
Physical  suffering  and  anxiety  must  also  be  con- 
sidered but  these  consequences  are  not  capable  of 
measurement  and  therefore  cannot  be  made  the  sub- 
ject of  a  scientific  study.  Having  determined  the  eco- 
nomic loss  we  will  be  in  a  position  to  judge  the  mag- 
nitude of  the  problem  and  to  adopt  measures  for  its 
solution  which  are  commensurate  with  its  importance. 

The  Results  of  Industrial  Accidents. — The  occur- 

*  Second  Annual  Report  of  the  Industrial  Accident  Board  of 
Massachusetts,  Boston,  1915,  pp.  29  and  32. 
2 


6  COMPENSATION  INSURANCE 

rence  of  these  injuries  is  directly  detrimental  to  the 
employee,  the  employer,  and  to  society. 

The  most  obvious  loss  is  borne  by  the  working  class, 
the  employee  and  his  dependents,  and  consists  of  sev- 
eral items;  loss  of  time,  loss  of  wages,  and  medical 
and  surgical  expenses.  In  130  steel  plants  during  the 
two.  years  ending  June  30,  1910,  the  average  time  lost 
per  injury  was  12.9  days,  and  the  average  time  lost 
per  300  day  worker  for  the  same  period  in  plants  and 
departments  where  data  were  available  was  estimated 
at  3.5  days.6  Assuming  an  average  wage  of  $2.00  per 
day  the  wage  loss  per  injury  was  $25.80  and  per 
worker,  $7.00,  in  addition  to  medical  and  surgical  ex- 
penses. These  figures  are  based  on  a  total  of  11,702 
accidents  and  150,714  days  lost;  involving,  at  the  $2.00 
wage,  a  total  loss  of  $301,428  in  wages,  to  which 
should  be  added  payments  to  physicians  and  hospitals. 
In  Massachusetts  the  duration  of  total  disability  has 
been  analyzed  for  the  96,382  non-fatal  accidents  men- 
tioned above  with  the  following  results : 

Duration  of  Total  Disability               No.  of  Cases  %  of  Total 

I  week  and  under 24,301  25.21 

1  to  2  weeks 9,755  10.12 

2  to  4  weeks 9,221  9.57 

4  to  8  weeks 7,065  7.33 

8  to  13  weeks 2,549  2.64 

13  weeks  to  6  months M91  i-55 

6  months  to  51  weeks 438  .45 

52  weeks  and  over 293  .30 

Disability  of  less  than  one  day.  ...  41,269  42.82 

9  Report  on  Iron  and  Steel  Industry.    Vol.  IV.  pp.  53-56. 


INDUSTRIAL  ACCIDENTS  7 

The  wages  of  the  workman  who  suffered  the  above 
injuries  have  been  analyzed  as  follows : 


No.  of  %of 

No.  of  %of 

Wage   Groups 

Cases  Total 

Wage  Groups 

Cases  Total 

$6  and  under.. 

.  .     5.i7i      5-37 

$16  01  —  $17  oo.  .  . 

4,085      4.24 

6  01  —  $7  oo.  . 

..    3,268      3.39 

17  01  —  18  oo..  . 

5,029      5.22 

7  01  —  8  oo.  . 

..    5,468      5-67 

18  01  —  19  oo.  .. 

1,612      1.67 

8  01  —  9  oo.  . 

.     7,941      8.24 

19  01  —  20  oo..  . 

3,i94      3-31 

9  or  —  10  oo.  . 

7,569      7-85 

2O  01  —  21    OO.  .. 

1,807      1.87 

IO  01  —  II    OO.  . 

8,471      8.79 

21   OI  —  22  OO.  .  . 

1,022         1.  06 

II    01  —  12  OO.. 

12,668    13.14 

22  OI  —  23  OO.  .  . 

496           -SI 

12   OI  —  13   00.  . 

4,670      4.85 

23  oi  —  •  24  oo.  .. 

842           .87 

13  01  —  14  oo.  . 

8,075      8.38 

24  oi  —  25  oo.  .. 

1,272         1.32 

14  01  —  i^  oo. 

7,782      8.07 

Over  $25 

2,148        2.23 

3j792      3-93 

Total 

06.382 

All  of  the  above  figures  apply  only  to  non-fatal  ac- 
cidents which,  while  they  are  much  more  numerous, 
cause,  in  the  average  case,  much  less  economic  loss 
than  do  fatal  accidents,  for  the  majority  of  workmen 
have  one  or  more  persons  dependent  in  whole  or  in 
part  upon  their  wages  for  support.  Of  the  509  fatal 
accidents  in  Massachusetts  422  involved  dependency, 
942  persons  were  totally  dependent  in  331  cases,  and 
144  were  partially  dependent  in  91  cases;  in  87  cases 
there  were  no  dependents. 

The  relative  importance  of  the  losses  from  various 
types  of  disability  may  be  indicated  in  a  very  general 
way  by  a  table  drawn  up  by  the  actuaries  of  the  Indus- 
trial Insurance  Department  of  the  state  of  Washing- 
ton. Assuming  that  the  average  work  year  consisted 
of  300  days  and  that  the  average  life  expectancy  was 
twenty-five  years,  this  table  was  compiled  for  the  year 
ending  June  30,  19 13-7 

7  Second  Annual  Report  of  the  Industrial  Insurance  Depart- 
ment, Olympia,  Wash.,  1914,  p.  102. 


8  COMPENSATION  INSURANCE 

Work  years  lost 

Fatal  Accidents 8,225. 

Temporary  Total  Disability i,  135.8 

Permanent  Partial  Disability 4,131.2 

Permanent  Total  Disability 325. 


Volumes  might  be  filled  with  statistics  to  show  the 
magnitude  of  the  problem  from  the  point  of  view  of 
the  workingman.  He  is  hard-pressed  to  meet  the  nec- 
essary expenses  of  existence  and  is  entirely  incapable 
of  providing  adequately  for  himself  and  his  depend- 
ents in  case  an  accident  removes  his  source  of  income. 
Unquestionably,  were  his  the  only  loss  from  industrial 
accidents,  there  would  be  an  overwhelming  need  for 
investigation  and  the  application  of  remedial  meas- 
ures. 

But  the  employer  is  also  affected.  It  is  to  his  inter- 
est to  have  his  business  proceed  efficiently  and  without 
interruption;  if  a  workman  is  injured  his  place  must 
be  filled  by  finding  a  new  man  who  will  often  require 
considerable  time  to  become  accustomed  to  his  work. 
Damage  suits  are  a  frequent  result  of  accidents  and 
these  cause  friction  between  employer  and  employed 
and  involve  large  expense  in  the  defense  of  claims  on 
the  part  of  the  former.  If  there  were  no  industrial 
accidents  production  would  proceed  on  a  more  efficient 
basis  and  the  attention  given  to  the  consequences  could 
be  expended  on  other  problems. 

Thus  far  the  effect  of  industrial  accidents  on  those 

most  vitally  and  directly  interested  has  been  examined, 

j  but  if  social  action  is  to  be  demanded  people  in  gen- 


L 


INDUSTRIAL  ACCIDENTS  9 

eral  must  be  informed  of  their  interest  in  the  problem 
before  us.  Society  loses,  first  from  the  direct  decrease 
in  productivity,  due  both  to  the  cessation  of  produc- 
tive effort  on  the  part  of  the  injured  man  and  to  the 
lowering  of  the  general  efficiency  of  industry.  In  ad- 
dition, the  injured  man  and  his  dependents  must  be 
cared  for,  with  a  consequent  lowering  of  standards 
which  reacts  further  to  decrease  general  productivity. 
If  the  workman  sues  his  employer  for  damages  the  ex- 
pensive machinery  of  the  law  is  set  in  motion  and  an-  > 
other  heavy  item  of  loss  is  added,  for  cases  of  this 
sort  occupy  a  large  share  of  the  court's  time  whcrey 
workmen's  compensation  laws  are  not  yet  in  force. 

Responsibility. — Having  investigated  the  nature  and 
extent  of  industrial  accidents  the  next  step  logically 
is  to  determine  where  the  responsibility  for  their  oc- 
currence rests.  With  a  knowledge  of  this,  we  can 
more  readily  attack  the  causes,  and  more  justly  assess 
the  cost  of  caring  for  the  injured.  Many  accidents 
can  be  traced  to  a  lack  of  care  or  to  actual  wrongdo- 
ing on  the  part  of  some  person,  employer  or  employee, 
but  by  far  the  greatest  share  of  casualties  is  due  to 
the  hazard  of  industry.  By  the  hazard  of  industry 
(or  "trade  risk")  is  meant  that  hazard  which  accounts 
for  accidents  not  due  to  the  personal  fault  of  any  in- 
dividual. They  are  a  necessary  result  of  the  existing 
methods  of  conducting  business,  and  responsibility  for 
their  occurrence  should  be  assigned  to  the  industry. 
That  this  factor  is  of  very  real  importance  in  deter- 
mining accident  rates  is  shown  by  an  examination  of 
comparative  tables  showing  the  rates  for  different  in- 
dustries over  a  series  of  years.  It  is  found  that  the 


10  COMPENSATION  INSURANCE 

variation  as  between  industries  is  approximately  con- 
stant; for  example,  mining  and  steel  work  will  show 
a  high  accident  frequency,  while  the  textile  industry 
and  boot  and  shoe  manufacturing  will  always  have 
a  much  lower  rate. 

Various  attempts  have  been  made  to  analyze  reports 
of  accidents  in  order  to  determine  the  personal  and  in- 
dustrial factors.  The  results  should  be  accepted  as 
only  approximately  correct  since  so  many  elements 
enter  into  each  case  that  it  is  impossible  to  make  rigid 
classifications.  A  careful  statistical  investigation  in 
a  large  iron  and  steel  plant  covering  a  period  of  six 
years  discloses  the  following  figures :  8 

Accidents  due  to  % 

Hazard  of  Industry 60 

Negligence  of  worker 7 

Negligence  of  fellow  worker 6 

Negligence  of  employer 4 

Not  disclosed  by  the  record 23 


100 


In  different  departments  of  the  plant  the  percentage 
of  accidents  due  to  the  hazard  of  industry  varied  from 
52  to  69  per  cent. 

Statistics  compiled  for  three  years  in  the  State  of 
Washington  are  given  below  :  9 

8  Report  on  Iron  and  Steel  Industry.    Vol.  IV.,  pp.  174-5. 

9  Second  Annual  Report  of  the  Industrial  Insurance  Depart- 
ment,   p.  97. 

Fourth  Annual  Report  of  the  Industrial  Insurance  Depart- 
ment, p.  94. 


INDUSTRIAL  ACCIDENTS  11 

Accidents  due  to  1913  1914  1915 

Risk  of  Trade 69.0%  81.7%  89.0% 

Workmen's    fault 7.8  7.2  5.3 

Fellow  servant's  fault...     2.4  3.2  1.5 

Employer's  fault .7  .2  .1 

Foreman's    fault I  .1  .05 

Third  person's  fault 2  .2  .15 

Facts  not  ascertainable .  .    19.8  7.4  3.9 

100%        100%        100% 

Everywhere  the  testimony  is  the  same;  the  hazard 
of  industry  is  responsible  for  a  large  percentage  of  in- 
dustrial accidents  and,  with  the  improvement  of  safety 
devices  and  greater  care  on  the  part  of  both  the  work- 
men and  his  employer,  we  may  expect  to  see  an  in- 
crease in  this  percentage. 

It  is  occasionally  argued  that  the  extra  hazard  in- 
volved in  a  given  trade  is  offset  by  larger  'wages, 
but  no  definite  relation  between  hazard  and  wages 
has  ever  been  shown  to  exist.  High  wages  are 
usually  due  to  the  limited  supply  of  skilled  workmen 
and  numerous  examples  of  a  low  wage  scale  in 
extremely  dangerous  industries  are  familiar  to  every- 
one. 

Accident  Statistics. — The  study  of  industrial  acci- 
dents in  the  United  States  has  been  greatly  hampered 
by  a  lack  of  reliable  and  adequate  data.  Besides,  the 
data  of  individual  states  have  not  been  comparable  be- 
cause of  variation  in  thoroughness  and  methods  of 
classification.  The  adoption  of  a  uniform  and  com- 
plete accident-reporting  schedule  is  strongly  to  be  ad- 
vised since  it  is  only  by  such  means  that  we  can  se- 


12  COMPENSATION  INSURANCE 

cure  the  facts  necessary  for  a  practical  consideration 
of  the  problem. 

The  Problem  of  Industrial  Accidents. — With  the 
above  facts  before  us  we  are  in  a  position  to  define 
clearly  the  problem  involved  in  industrial  accidents. 
We  must  find  methods  of  eliminating  them  or  of  mak- 
ing their  consequences  less  burdensome,  always  re- 
membering that  any  social  cost  is  justified  which  re- 
sults in  a  net  social  saving.  A  consideration  of  these 
methods  will  occupy  the  following  chapters. 

References  at  end  of  Chapter  III. 


CHAPTER  II 
THE  PREVENTION  OF  INDUSTRIAL  ACCIDENTS 

The  most  logical  method  of  eliminating  the  suffer- 
ing and  economic  loss  due  to  industrial  accidents  is  to 
prevent  their  occurrence;  with  the  removal  of  the 
cause  the  effect  will  disappear.  But  the  complete  elim- 
ination of  industrial  accidents  seems  to  be  impossible 
if  industry  is  to  continue  with  human  beings  as  a  fac- 
tor in  production.  Accidents  must  be  divided  into 
two  classes,  the  preventable  and  the  unpreventable, 
and  every  reasonable  effort  should  be  made  to  antici- 
pate and  eliminate  those  in  the  first  class.  The  burden 
of  those  which  remain  should  be  lightened  in  so  far 
as  possible  and  should  be  justly  distributed  among  the 
responsible  parties. 

The  achievement  of  industrial  safety  through  pre- 
vention of  accidents,  while  not  a  new  idea,  has  been 
the  subject  of  active  endeavor  only  during  the  last 
decade;  in  fact,  with  the  greater  part  of  our  indus- 
trial population,  safety  work  is  a  development  of  the 
last  two  or  three  years.  In  the  past,  lack  of  accurate 
knowledge,  currency  of  individualistic  ideals,  and  gen- 
erally wasteful  methods  of  production  have  precluded 
attention  to  the  problem.  Industrial  accidents  have 
been  regarded  as  an  unfortunate  but  not  particularly 
important  incident  of  modern  production.  Now;  with 

13 


14  COMPENSATION  INSURANCE 

the  growth  of  the  conservation  idea,  the  development 
of  a  knowledge  of  consequences  through  statistical 
studies,  and  direct  financial  pressure  on  employers 
through  laws  compelling  the  payment  of  compensa- 
tion to  workmen,  we  find  rapidly  increasing  and  effec- 
tive interest- in  the  subject. 

Agencies  of  Accident  Prevention. — The  State  should 
be  the  primary  force  in  the  prevention  of  accidents 
since  it  represents  all  classes  and  is  in  a  position  to 
exercise  compulsion.  That  our  governments  have  been 
far  behind  Europe  in  safety  activity  has  been  due 
largely  to  ignorance  of  the  possibilities  of  such  work 
and  to  absence  of  the  demand  for  it  because  of  our 
less  highly  concentrated  population.  One  of  the  first 
examples  of  state  interference  in  the  cause  of  safety  is 
the  Safety  Appliance  Law  passed  by  the  Federal  Gov- 
ernment in  1893,  aimed  specifically  at  accidents  due  to 
the  dangerous  methods  of  coupling  cars  then  in  vogue 
on  interstate  railroads.  This  law  has  since  been  con- 
siderably extended  to  cover  a  wider  range  of  railroad 
work.  The  individual  states  have  passed,  from  time 
to  time,  laws  for  the  elimination  of  specific  unsafe 
practices  and  for  the  general  improvement  of  condi- 
tions in  dangerous  trades,  but  their  enforcement  has 
usually  been  lax  and  productive  of  little  good. 

As  a  result,  however,  of  steadily  growing  interest 
during  the  last  six  or  seven  years  legislatures,  backed 
by  public  demand,  are  enacting  more  effective  statutes, 
in  some  cases  independent  of  a  Workmen's  Compen- 
sation Act,  but  more  often  supplementary  thereto. 
The  most  important  feature  of  these  later  enactments 
has  been  the  creation  of  expert  commissions  for  the 


THE  PREVENTION  OF  ACCIDENTS        15 

collection  of  information  and  the  enforcement  of  the 
law.  TJiese  commissions  are  usually  empowered  to 
make  inspections  and  require  the  installation  of  safety 
devices,  and  make  annual  reports  of  the  progress  of 
their  work.  More  significant  still  is  the  educational 
work  which  they  are  carrying  on  through  the  publica- 
tion of  pamphlets,  the  promulgation  of  safety  stand- 
ards, public  exhibitions  and  lectures,  safety  museums 
and  libraries,  and  conferences  with  individual  em- 
ployers. 

The  latest  development  of  the  governmental  pro- 
gram is  the  adoption  of  safety  as  a  subject  of  instruc- 
tion in  the  public  schools.  New  Jersey  passed  a  law 
in  1913  requiring  courses  to  be  installed  and  other 
states  are  becoming  interested  in  this  branch  of  the 
work.  Capably  administered,  this  should  be  an  effec- 
tive method  of  reducing  accidents.  Its  idea  is  to  make 
accident  prevention  a  part  of  the  every-day  conscious- 
ness of  the  population  and  the  accomplishment  of  this 
end  is  of  fundamental  importance. 

Employers,  after  years  of  ignorance  and  apathy,  are 
fast  becoming  awakened  to  the  humanitarian  and 
financial  gains  arising  from  accident  prevention  and 
are  expending  an  immense  amount  of  thought  and 
money  to  decrease  the  accident  hazard  in  their  plants. 
The  United  States  Steel  Corporation  was  a  pioneer 
in  safety  work  and  has  developed  its  organization  and 
methods  to  a  very  high  pitch  of  efficiency.  Leading 
corporations  in  other  lines  have  also  made  great  ad- 
vances in  the  direction  of  industrial  safety  and  it  is 
only  a  question  of  time  before  every  corporation  of 
any  size  will  recognize  accident  prevention  as  one  of 


16  COMPENSATION  INSURANCE 

the  most  important  phases  of  its  activity.  Manufac- 
turers of  machinery  are  responding  to  the  ,demand, 
and  dangerous  machines  are  now  carrying  guards  as 
regular  equipment.1  The  manufacture  of  safety  de- 
vices is  becoming  an  independent  industry  and  invent- 
ors are  constantly  working  on  new  ideas  for  more 
efficient  protection. 

x  One  of  the  greatest  aids  to  the  employer  in  the  so- 
lution of  safety  problems  is  the  insurance  company. 
These  companies,  on  the  payment  of  a  stipulated  pre'- 
mium,  assume  the  liability  of  the  employer  to  pay  dam- 
ages or  compensation  to  his  employees  on  account  of 
accidents,  and  one  of  their  chief  inducements  is  the 
offer  of  expert  advice  on  safety  work  whereby  the 
employer  may  not  only  reduce  his  accidents  but  may 
also  secure  substantial  reductions  in  the  rate  of  pre- 
mium. Competition  in  this  service  has  developed  in- 
spection departments  which  are  of  very  real  economic 
value.  In  addition  to  personal  inspection  and  advice, 
pamphlets  dealing  with  safety  are  published,  warning 
signs  are  furnished,  and  some  companies  issue  small 
volumes  which  are  practically  text-books  of  accident 
prevention. 

\  Two  cooperative  enterprises  for  improving  safety 
conditions  merit  especial  mention :  the  American  Mu- 
seum of  Safety  and  the  National  Safety  Council. 
These  organizations  are  supported  by  membership 
fees  and  contributions  of  industrial  corporations  and 
public-minded  associations  and  individuals. 

1  One  industrial  corporation  makes  a  practice,  whenever  a  ma- 
chine comes  to  them  insufficiently  protected,  of  adding  the  neces- 
sary guards  and  deducting  the  cost  from  the  bill  for  the  machine. 


THE  PREVENTION  OF  ACCIDENTS        17 

Yrhe  American  Museum  of  Safety,  in  New  York 
City,  is  a  clearing-house  and  exhibition  place  for  safety 
methods  and  appliances  and  is  modeled  after  the  great 
safety  museums  of  Germany  and  other  European  coun- 
tries. Safety  devices  and  models  have  been  collected 
and  are  displayed  for  the  inspection  of  anyone  in- 
terested. A  library  is  also  maintained  and  educational 
work  is  carried  on  through  illustrated  lectures  and 
the  distribution  of  pamphlets.2 

^  The  National  Safety  Council,  with  headquarters  in 
Chicago,  is  the  parent  organization  of  large  numbers 
of  local  councils  located  in  the  principal  cities.  Its 
chief  features  are  weekly  bulletins  of  statistics  and 
safety  illustrations,  an  information  bureau  for  mem- 
bers, and  annual  Safety  Congresses.  These  con- 
gresses attract  safety  experts  from  every  industry  and 
the  papers  and  informal  discussions  are  of  great  value. 
Thus  far  the  function  of  the  workman  in  the  pre- 
vention of  accidents  has  not  been  mentioned,  though 
he  is  an  all-important  factor  in  the  success  of  any 
plan  for  the  promotion  of  industrial  safety.  The 
work  of  employers  and  the  state  can  be  made  effective 
only  through  his  intelligent  and  active  cooperation 
and  hence  all  safety  organizations  are  built  around 
the  fundamental  idea  of  awakening  the  interest  of  the 
employee  in  his  own  welfare.  Initiative  and  admin- 
istration must  come  from  the  employing  class,  but  the 
greater  part  of  the  reduction  in  accident  rates  is  due 
directly  to  the  care  and  efforts  of  the  workers. 
Methods  of  Accident  Prevention. — The  develop- 

2  Massachusetts  and  California  have  Museums  of  Safety  main- 
tained by  the  State. 


18  COMPENSATION  INSURANCE 

ment  of  efficient  methods  for  the  prevention  of  acci- 
dents must  rest  on  an  accurate  knowledge  of  causes. 
Hence  a  prerequisite  to  the  establishment  of  a  safety 
organization  and  the  installation  of  preventive  appli- 
ances is  a  careful  study  of  causes  and  their  relative 
significance.  For  example,  Illinois  statistics  show 
that  "falling  objects"  were  responsible  for  19  per 
cent  of  the  accidents  occurring  during  the  six  months 
ending  December  31,  1913,  and  that,  in  each  class  of 
industry,  the  number  attributable  to  this  cause  far  ex- 
ceeded that  due  to  any  other.  These  facts  would  indi- 
cate the  necessity  of  giving  primary  emphasis  to  the 
prevention  of  such  accidents  and  would  probably  war- 
rant the  expenditure  of  a  relatively  large  amount  of 
attention  and  money .  for  that  purpose.  A  further 
study  might  show  that  these  accidents  give  rise  to 
comparatively  short  periods  of  disability  and  that  an- 
other less  numerous  class  results  in  greater  total  loss. 
In  that  case  the  emphasis  would  be  shifted.  This  is 
but  a  suggestion  of  the  need  for  careful  scientific  con- 
sideration of  every  element  of  the  problem  as  a  basis 
for  effective  work. 

The  simplest  method  of  protecting  workmen  is  the 
use  of  mechanical  guards  to  prevent  falls  and  con- 
tact with  dangerous  machinery  and  to  catch  flying 
particles,  and  tools  or  materials  which  may  have  been 
dropped.  Familiar  examples  are  covers  for  gears  and 
belting,  railings  on  elevated  runways,  wire  screens  be- 
fore metal  chipping  machines  and  strips  of  metal  or 
wood  on  the  edges  of  scaffolding.  Machines  are  often 
redesigned  to  render  their  operation  safer;  de- 
vices for  stopping  machinery  are  applied  and  the  parts 


THE  PREVENTION  OF  ACCIDENTS       19 

are  made  more  accessible  for  cleaning  and  oiling.  Ar- 
rangements are  also  made  to  prevent  setting  machin- 
ery in  motion  while  men  are  engaged  in  repair  work, 
and  methods  of  lighting  are  used  which  give  the  em- 
ployee the  clearest  possible  view  of  his  work.  Warn- 
ing signs,  designed  with  a  view  to  compelling  atten- 
tion, are  used  to  remind  the  employee  of  the  presence 
of  danger.  Besides  signs  to  guard  specific  danger 
zones,  large  placards  and  electric  signs  are  placed  in 
prominent  positions  to  keep  the  idea  of  "safety  first" 
constantly  in  the  mind  of  the  employee.3 

The  success  of  a  program  of  accident  prevention 
should  be  measured  in  terms  of  the  consequences  of 
accidents  as  well  as  of  accident  frequency,  and  every 
effort  should  be  made  to  reduce'  the  period  of  disa- 
bility due  to  them.  "First  aid"  is  an  essential  feature 
of  a  comprehensive  scheme  and  the  larger  plants  now 
have  their  own  hospitals  with  physicians  who  attend 
to  all  injuries  free  of  charge.  It  is  usually  required 
that  every  injury,  no  matter  how  slight,  be  submitted 
for  examination.  Smaller  plants  have  visiting  physi- 
cians or  make  arrangements  for  treatment  at  some 
general  hospital.  This  treatment  often  substitutes  a 
loss  of  a  few  minutes  for  a  protracted  period  of  dis- 
ability, as  many  apparently  slight  injuries  develop  into 
serious  cases  of  infection  if  not  attended  to  at  the  out- 
set. 

3  Illustrations  of  various  methods  of  accident  prevention  by 
use  of  mechanical  guards  are  given  on  pages  20-23. 

For  the  illustrations  of  methods  of  accident  prevention  used 
in  this  chapter  the  author  is  indebted  to  the  United  States  Steel 
Corporation,  with  the  exception  of  Illustration  III,  which  was 
furnished  by  the  Benjamin  Electric  Mfg.  Co. 


ILLUSTRATION  I 
Lathe    Gears   Unguarded. 


ILLUSTRATION  II 

Lathe   Gears  Guarded. 

20 


THE  PREVENTION  OF  ACCIDENTS        21 

Carelessness  and  improper  methods  of  work  give 
rise  to  many  avoidable  injuries.  These  conditions  can 
be  corrected  only  through  educational  methods.  Bul- 
letins are  posted  wherever  the  men  are  likely  to  read 
them,  magazines  are  issued  in  which  safety  hints  are 


ILLUSTRATION  III 

Stamping    Press    Redesigned    to    Require    Placing    Both 
Hands  on  Levers  in  Order  to  Operate  Machine. 

combined  with  other  topics  of  general  interest.  Stere- 
opticon  lectures  are  given  by  safety  experts  and  in 
some  cases  the  men  are  paid  to  attend.  To  supplement 
these  general  means,  individual  instructiori  is  given, 
rule  books  are  distributed,  and  examinations  set,  with 
prizes  for  correct  answers.  In  every  possible  way  an 
attempt  is  made  to  point  out  to  the  workman  that  it  is 


22  COMPENSATION  INSURANCE 

to  his   overwhelming   advantage   to   assist   in   safety 
work. 

As  in  all  extensive  undertakings  involving  the  co- 
operation of  a  large  number  of  individuals,  organiza- 
tion is  the  prime  essential  for  the  successful  operation 
of  a  safety  system.  The  proper  development  of  an 
organization  requires  careful  adaptation  of  its  units 
to  each  special  branch  of  work  and  coordination  of 
the  units  in  a  centralized  and  harmonious  scheme.  The 


ILLUSTRATION  IV 
Square    and    Circular    Knife    Holders. 

organization  of  the  United  States  Steel  Corporation 
may  be  taken  as  an  example  of  the  successful  solution 
of  this  problem.  In  1906  a  Committee  of  Safety  was 
appointed  from  among  the  officials  of  the  subsidiary 
companies  and,  since  that  date,  this  committee  has 
been  in  supreme  charge  of  the  safety  work  of  the  Cor- 
poration. It  considers  safety  methods  and  appliances, 
conducts  inspections  of  individual  companies,  studies 
serious  accidents,  and  makes  recommendations  for 
improvements.  As  a  clearing  house  for  ideas  and  ex- 
perience from  every  section  of  the  Corporation  the 
Bureau  of  Safety,  Sanitation,  and  Welfare  has  been 


45x 


1  \ 


<! 


f 


>  .s 


0} 

CO 


'o 

S3 
CO 


23 


24  COMPENSATION  INSURANCE 

established.  This  bureau  has  headquarters  in  New 
York  City  and  is  in  charge  of  a  general  manager 
whose  entire  time  is  given  to  the  collection  of  sta- 
tistics and  photographs  and  to  the  coordination  and 
administration  of  the  safety,  sanitation,  and  welfare 
work  of  the  Corporation. 

Each  subsidiary  company  has  its  Central  Commit- 
tee of  Safety  composed  of  representatives  from  the 
department  of  safety  and  relief,  the  legal  and  the 
surgical  departments,  and  from  the  various  plants.4 
To  assist  this  committee  on  special  problems  subcom- 
mittees of  master  mechanics,  electrical  engineers,  blast 
furnace  superintendents,  and  others,  are  consulted. 
Each  plant  has  its  own  committee,  under  which  are 
the  safety  inspector,  special  committees,  department 
committees,  a  safety  instructor,  and  committees  of 
foremen  and  workmen.  Each  of  these  units  has  in 
charge  the  work  for  which  it  is  best  adapted  and  each 
is  connected  with  the  central  committee  through  an 
unbroken  line  of  responsibility.  Frequent  meetings 
are  held,  inspections  are  made,  and  recommendations 
for  improvements  are  considered,  reports  on  all  of 
these  activities  being  made  to  the  superior  commit- 
tees which  take  final  action.5 

Although  no  one  of  the  methods  of  accident  preven- 
tion outlined  should  be  neglected,  they  are  not  all  of 
equal  importance  in  their  results.  Mere  safeguarding 
of  machines  can  accomplish  little  without  education 

4  The  organization  of  the  Illinois  Steel  Co.  will  be  treated  as 
typical  of  the  methods  in  vogue  in  all  subsidiary  companies. 

5  For  a  graphic  outline  of  this  organization  see  the  diagram  on 
the  opposite  page. 


THE  PREVENTION  OF  ACCIDENTS        25 


SAFETY  &  SANITATION    COMMITTEES 
ILLINOIS  STEEL  CO. 


of  employees  and  the  successful  carrying  out  of  any 
scheme  depends  largely  on  the  organization  behind 
it.  Robert  J.  Young,  Manager  of  the  Department  of 
Safety  and  Relief  of  the  Illinois  Steel  Company,  has 
made  the  following  estimate  of  the  relative  efficiency 
of  the  several  methods: 

Organization SS% 

Attitude   and   personal    work    of    those    in 

authority    3°% 

Safety   Committees 20% 

Inspections  (not  by  committees) . $% 


26  COMPENSATION  INSURANCE 

Education 2S% 

Instruction  to  employees 12% 

Bonuses,  prizes,  etc S>% 

Talks  by  superintendents,  foremen,  and  oth- 
ers     3% 

Signs    2% 

Safeguarding 20% 

Safety  devices 12% 

Lighting 5% 

Cleanliness  and  order 3% 

Any  such  estimate  is,  of  course,  not  final,  but  serves 
as  an  indication  of  the  relative  importance  to  be  at- 
tached to  various  activities  in  connection  with  safety 
work. 

Occupational  Diseases. — The  problem  of  diseases 
arising  from  a  workman's  occupation  is  a  phase  of 
industrial  hazard  which  has  been  given  less  attention 
than  the  problem  of  violent  accidents.  While  less  spec- 
tacular it  is  worthy  of  careful  study,  and  efforts  for 
prevention  should  take  the  same  direction,  with  the 
emphasis  on  medical  care  and  the  prevention  of  in- 
fection. 

References  at  end  of  Chapter  III. 


CHAPTER  III 
THE  RESULTS  OF  ACCIDENT  PREVENTION 

Since  the  aim  of  accident  prevention  is  reduction 
of  the  losses  occasioned  by  industrial  accidents,  its  re- 
sults should  be  measured  in  terms  of  saving  to  those 
who  have  experienced  such  losses.  Society  is  benefit- 
ed by  an  increase  in  general  productiveness  and  a 
decrease  in  the  expense  of  caring  for  the  injured  and 
their  dependents  and  of  hearing  damage  suits.  The 
employer  gains  through  increased  efficiency  due  to 
avoidance  of  friction  and  greater  permanence  of  his 
labor  force,  as  well  as  through  lessened  expense  for 
insurance  or  for  defending  damage  suits  and  paying 
claims.  The  employee  receives  more  wages,  loses  less 
time,  and  both  he  and  his  dependents  avoid  suffering 
and  privation.  A  considerable  body  of  figures  exists 
showing  reduced  accident  frequency  and  consequent 
economic  saving  due  directly  to  organized  accident 
prevention. 

Reduction  in  Accident  Frequency. — Reduction  in 
accident  frequency  is  the  most  immediate  and  striking 
result  of  safety  work.  A  careful  record  of  the  dis- 
abling injuries  occurring  in  a  large  steel  plant  from 
1900  to  1911  shows  the  effect  of  a  developing  safety 
program.  These  accidents  were  reduced  from  370 
per  one  thousand  3OO-day  workers  in  1900  to  109  per 

27 


§ 


8 


RESULTS  OF  ACCIDENT  PREVENTION      29 

one  thousand  in  1911,  a  decrease  of  over  70  per 
cent.1 

The  diagram  on  page  28  shows  this  experience  by 
years.  In  connection  with  this  diagram  the  records 
for  the  years  1906  and  1909  are  particularly  signifi- 
cant, "tt  may  be  stated  that  the  year  1906  repre- 
sented a  period  of  thorough  reorganization  and  safe- 
guarding throughout  the  machine  shops  and  in  con- 
nection with  other  mechanical  operations  and  that  the 
accident  rate  shows  a  definite  response  to  these  ef- 
forts." 2  "Increased  output  accompanied  by  'speed- 
ing up'  the  workmen  always  increases  the  danger. 
The  year  1909  was  a  'speeding  up'  year.  It  was  also 
a  year  of  employment  of  many  new  workmen.  Its 
accident  rate  reflects  these  conditions."  3 

In  this  same  investigation  a  study  was  made  of  two 
plants  having  extreme  conditions  as  to  safety  sys- 
tems. "Plant  A  stands  high  on  the  list  of  those 
that  have  undertaken  successfully  safety  activities. 
Plant  X,  on  the  other  hand,  is  among  those  which 
may  be  said  to  have  done  almost  nothing  in  this  di- 
rection." During  1910  Plant  A  showed  an  accident 
rate  of  180  per  one  thousand  3OO-day  workers,  while 
Plant  X  had  a  rate  of  508,  nearly  three  times  as 
great.4  Another  study,  in  which  sixteen  plants  were 
classified  according  to  the  development  of  their  safety 
systems,  showed  the  following  results :  5 

1  Report  on  the  Iron  and  Steel  Industry,  Vol.  IV.,  p.  118. 

2  Jhid,  p.  120. 
3 1 bid,  p.  I2i. 
*Ibid,  p.  59- 

6  Ibid,  p.  43  ff. 


30  COMPENSATION  INSURANCE 

Accident  Rates 
per  1000  300- 
day  workers. 
Class  A   (System  well  developed)6 167.1 

Class  B   (System  in  process  of  development)  .  .272.4 
Class  C  (System  not  developed) 5°7-9 

Further  notable  examples  of  reduction  in* accident 
rates  through  safety  work  are  given  in  the  following 
table:7 


American  Smelting  &  Refining  Company 

Bucyrus  Company 65% 

Cadillac   Motor   Company 69% 

Commonwealth  Edison  Company 40% 

Commonwealth  Steel  Company 69% 

Corn  Products  Refining  Company 37% 

Eastman  Kodak  Company 78% 

Fairbanks-Morse  Mfg.  Company 72% 

George  Cutter  Company 43% 

Harrison  Bros.  &  Company,  Inc 75% 

Illinois  Steel  Company 85% 

Inland  Steel  Company 35% 

International    Harvester    Company 88% 

6  "The  essentials   of  a  safety  system  likely  to  prove  effective 
may  be  summarized  as   follows.     In  plants  of   Class  A  all  the 
factors  specified  are  present: 

1.  Safeguarding  by  signs,  warnings  and  mechanical  con- 

trivances. 

2.  Adequate  safety  inspection.     . 

3.  Safety  committees  of   superintendents  and  foremen. 

4.  Safety  committees   of   workmen. 

5.  Emergency  and  hospital  care  of  the  injured. 

6.  A  compensation  system. 

7.  Provision  for  the  permanently  disabled." 

7  These  figures  are  printed  through  the  courtesy  of  The  Ameri- 
can Museum  of  Safety. 


RESULTS  OF  ACCIDENT  PREVENTION      31 

Jones  &  Laughlin  Steel  Company 78% 

A.  J.  Lindemann  &  Hoverson  Company 62% 

Milwaukee  Coke  &  Gas  Company 83% 

Neenah  Paper  Company 83% 

Packard  Motor  Car  Company 72% 

The  Pullman  Company 46% 

Raritan  Copper  Works 22% 

Rochester  Railway  &  Light  Company 33% 

United  States  Steel  Corporation 41% 

(The  reduction  of  the  accident  rate  is,  to  a  certain 
extent,  cumulative  since  continuity  of  employment  tends 
to  a  further  reduction  of  the  rate.  ,A  new  man,  em- 
ployed because  of  the  incapacity  of  the  injured  employee, 
is  much  more  subject  to  accidents  than  one  who  has 
worked  continuously.) 

Reduction  in  Loss  of  Time  and  Wages. — From  an 
economic  point  of  view  the  chief  index  of  loss  from 
accidents  is  the  loss  of  time.  In  a  large  steel  plant, 
employing  6,624  men  the  total  time  lost  was  reduced 
from  22,963  days  in  1905  to  18,002  days  in  1910,  a 
saving  of  4,961  days  through  the  adoption  of  safety 
measures.  The  average  number  of  days  lost  per  300- 
day  worker  was  reduced  from  4.28  in  1905  to  2.96  in 
I9io.8  Assuming  a  wage  of  $2.00  per  day,  this  rep- 
resents a  saving  during  the  year  1910  of  $9,922  for 
the  working  force  of  the  plant,  and  of  $2.64  for  each 
300-day  worker.  In  two  plants  having  extreme  con- 
ditions as  to  safety  systems,  there  was,  during  1910, 
a  difference  of  6.1  days  per  3OO-day  worker  in  favor 
of  the  plant  with  a  well  developed  system,  representing 

8  Report  on  the  Iron  and  Steel  Industry,  Vol.  IV.,  p.  57. 


32  COMPENSATION  INSURANCE 

a  wage  saving  of  $12.20.  In  Wisconsin  safety  work 
has  resulted  in  large  reductions  in  the  number  of  days 
lost 9  and  it  is  probable  that,  were  figures  available, 
the  same  results  would  be  evident  in  other  states.10 

The  Massachusetts  Industrial  Accident  Board  has 
published  a  study11  showing  the  results  of  a  cam- 
paign to  secure  the  installation  of  safety  devices  and 
organizations.  These  figures  may  be  slightly  inaccu- 
rate owing  to  the  fact  that,  during  the  second  of 
the  periods  considered,  the  assumption  was  made  that 
there  had  been  no  change  in  the  number  of  employees 
in  the  various  plants.  Even  with  this  qualification, 
the  study  is  extremely  valuable  and  the  results  may 
be  considered  as  approximately  correct.  Data  were 
first  collected  for  the  six-months'  period  ending  De- 
cember 31,  1913,  from  factories  employing  a  total  of 
over  55,000  men.  During  the  succeeding  six  months 
inspections  of  the  factories  were  made  and,  on  the 
basis  of  the  inspections  and  an  analysis  of  the  data, 
recommendations  were  made  for  improvement,  and 
employers  were  urged  to  adopt  effective  means  for 
promoting  safety.  As  a  measure  of  the  success  of  the 
campaign  figures  were  again  collected  for  the  six 
months  ending  December  31,  1914,  and  these  were 
compared  with  the  corresponding  data  for  the  preced- 

9  See  "Organized  Accident  Prevention,"  by  C.  W.  Price. 

10  The  figures  given  in  this  paragraph  have  reference  only  to 
the  loss  of  time  occasioned  by  non-fatal  accidents.    The  reduction 
in  loss  through  death,  computed  on  a  basis  of  working-life  ex- 
pectancy, would  add  greatly  to  their  significance  but  the  necessary 
information  is  not  available. 

11  Massachusetts   Industrial  Accident   Board,   Bulletin   No.   13, 
October,  1915. 


RESULTS  OF  ACCIDENT  PREVENTION      33 

ing  year.     This  comparison  gave  the   following  re- 
sults :  12 

REDUCTIONS  IN  ACCIDENT  FREQUENCY  AND  GRAVITY 


Reported  accidents  ..............  ,.  .,  ......  ,  ......  20.8 

Disability  cases  ...............................  20.3 

Days   lost  ..........  -----  ,  ..........  ............  36.8 

Wage    loss  ...................................  36.0 

Compensation  cases.  .  .  .  ...........  ......  ......  28.6 

Compensation  days.  .......  ........  ..............  44.2 

Compensation  paid  ............................  41.1 

A  reported  accident  is  one  for  which  a  notice  of  in- 
jury was  sent  in  by  the  employer,  it  being  required 
that  all  accidents,  however  slight,  be'  reported  to  the 
Board.  "A  disability  case  is  one  in  which  there  was 
disability  on  any  day  or  shift  other  than  the  one 
on  which  the  injury  occurred,"  and  a  day  lost  is  any 
such  other  day.  The  wage  loss  is  secured  from  the 
accident  reports.  A  compensation  case  is  one  on  ac- 
count of  which  payments  were  made  under  the  com- 
pensation act  for  total  disability,  the  act  providing 
that  compensation  shall  be  paid  after  the  first  two 
weeks  of  disability  only.  A  compensation  day  is  one 
for  which  payment  was  made  and  the  item  of  "com- 
pensation paid"  represents  the  actual  amount  received 
for  cases  of  total  disability. 

Net  Saving.  —  So  far  only  gross  saving  has  been 
considered,  but  to  analyze  the  situation  accurately  the 
net  saving  should  be  determined,  for  accident  preven- 

"  Ibid,  p.  15. 


34  COMPENSATION  INSURANCE 

tion  involves  large  expenditures  and  its  results  should 
be  judged  in  comparison  with  the  cost  of  obtaining 
them.  Such  a  judgment  must  be  based  on  a  broad  in- 
terpretation of  the  terms  "results"  and  "costs,"  for 
they  include  some  items  which  cannot  be  numerically 
expressed  and  others  the  value  of  which  is  not  read- 
ily ascertainable.  For  example,  suffering  cannot  be 
expressed  in  figures  nor  is  the  value  of  a  decrease  in 
friction  and  labor  troubles  easily  computed.  Another 
difficulty  in  making  an  accurate  judgment  at  present 
arises  from  lack  of  experience  and  incompleteness  of 
data.  In  the  greater  number  of  plants  accident  pre- 
vention is  a  development  of  the  last  two  or  three  years 
and  in  few  have  trustworthy  records  been  kept  even 
for  that  length  of  time.  In  only  one  published  re- 
port has  it  been  possible  to  find  a  statement  of  the 
money  saving  as  compared  with  expenditures  for  ac- 
cident prevention.  The  United  States  Steel  Corpora- 
tion reports  a  gross  saving  in  casualty  expense  for 
serious  injuries  of  $4,775,692.64  during  the  years  191 1, 
1912  and  1913.  The  expenditures  for  safety  which 
produced  this  saving  amounted  to  $2,003,712.29,  leav- 
ing a  net  saving  of  $2,771,980.35. 13 

Such  figures  indicate  very  definitely  that  the  pre- 
vention of  accidents  may  result  in  financial  saving  to 
the  employer  and  it  is  the  opinion  of  most  employers 
who  have  adopted  active  safety  measures  that  a  net 
saving  is  actually  produced.  The  statements  that 
"safety  work  is  indispensable  to  an  efficient  manufac- 
turing organization"  and  that  "in  our  opinion  there  is 

UU.   S.   Steel   Corporation.     Bureau  of   Safety,   Sanitation  & 
Welfare.    Bulletin  No.  5,  Dec.,  1914.    See  diagram,  p.  35. 


RESULTS  OF  ACCIDENT  PREVENTION      35 

no  question  that  all  efforts  towards  'safety  first'  are 
good  business  and  produce  profits"  are  examples  of 


this  attitude.    In  addition,  the  fact  that  those  corpora- 
tions which  have  long  had  a  reputation  for  "hard- 


36  COMPENSATION  INSURANCE 

headed,  practical  business  sense,"  are  leading  in  safety 
work  is  evidence  of  its  probable  contribution  to  profits. 

CONCLUSION 

It  has  been  shown  that  an  immense  number  of  in- 
dustrial accidents  which  cause  large  losses  to  society 
and  to  particular  classes  of  society  occur  every  year, 
and  that  the  burden  of  these  losses  falls  most  heavily 
on  the  working  class,  the  group  least  able  to  bear  it. 
Responsibility  for  the  occurrence  of  a  large  share  of 
these  accidents  has  been  definitely  assigned  to  present 
methods  of  conducting  industry.  Further,  it  has  been 
demonstrated  that  a  considerable  percentage  of  indus- 
trial accidents  may  be  prevented  by  the  adoption  of 
thoroughly  practicable  safety  measures.  That  the 
adoption  of  such  measures  results  in  a  tremendous 
economic  saving  to  society  and  to  individuals  is  un- 
questioned; that  this  saving  more  than  counterbal- 
ances the  economic  cost  of  prevention  is  almost  cer- 
tain. If  the  relief  of  suffering  and  privation  is  con- 
sidered, all  doubt  of  the  desirability  of  active  meas- 
ures of  prevention  is  removed. 

But  even  the  most  thoroughgoing  efforts  to  prevent 
industrial  accidents  have  not  succeeded  in  eliminating 
them  entirely  and  their  total  elimination  is  inconceiv- 
able so  long  as  the  human  being  is  a  factor  in  indus- 
try. The  greater  part  of  our  industries  have  not  even 
reached  this  irreducible  minimum,  for  many  employ- 
ers still  regard  safety  work  as  a  "socialistic  fad"  and 
effective  compulsion  is  exercised  in  but  few  states. 
Accidents,  preventable  and  unpreventable,  happen 
every  day  and  create  a  problem  that  demands  solution. 


RESULTS  OF  ACCIDENT  PREVENTION      37 

For  the  problem  of  preventable  accidents  there  is  only 
one  solution.  For  those  which  can  not  be  prevented 
some  means  of  compensation  for  economic  loss  should 
be  provided. 

REFERENCES 

Accidents  and  Accident  Prevention,  Vol.  IV.  of  Report 
on  Conditions  of  Employment  in  the  Iron  and  Steel 
Industry  in  the  United  States.  62d  Congress,  ist 
Session,  Senate  Document  No.  no,  Washington 


HOFFMAN,  FREDERICK  L.  Industrial  Accident  Statistics, 

Bulletin  of  the  U.  S.  Bureau  of  Labor  Statistics, 

No.  157.    Washington  (1915). 
Seventh  Annual  Report  of  the  Bureau  of  Labor  Statis- 

tics, and  Supplement,  Springfield,  111.,  1914,  1915. 
Accident  Bulletin.    Published  quarterly  by  the  Interstate 

Commerce  Commission,  Washington. 
Bulletins  on  Mine  Accidents,  Published  by  the  Bureau 

of  Mines,  Washington. 
BEYER,    DAVID    S.      "Industrial    Accident    Prevention," 

Houghton  Mifflin,  Boston  (1916). 
Proceedings   of  the   Safety   Congress   of  the   National 

Safety  Council.     (Annual),  Chicago. 
Bulletin  of  the  Bureau  of  Safety,  Relief,  Sanitation  and 

Welfare  of  the  U.  S.  Steel  Corporation.    Nos.  4  and 

5,  New  York. 
Annual  Report  of  the  Massachusetts  Industrial  Accident 

Board.    Boston. 
The  Sequel  to  the  Invitation  to  Employers  to  Organise  for 

Safety,   Bulletin   No.    13,   Massachusetts   Industrial 

Accident  Board,  Boston  (1915). 
Annual  Report  of  the  Industrial  Insurance  Department, 

Olympia,  Washington. 
4 


38  COMPENSATION  INSURANCE 

Annual  Report  of  the  Industrial  Accident  Commission, 

San   Francisco. 
PRICE,  C.  W.  "Organized  Accident  Prevention,"  Safety 

Engineering    (January,   1915). 


PART  II 

EMPLOYERS'  LIABILITY  AND  WORKMEN'S 
.  COMPENSATION 


CHAPTER  IV 

THE  LAW  OF  NEGLIGENCE  AS  APPLIED  TO  THE  RE- 
LATION OF  MASTER  AND  SERVANT 

The  Law  of  Negligence. — The  law  of  negligence 
is  a  branch  of  the  common  law  and  consists  of  a  set 
of  rules  for  determining  the  legal  liability  of  one  per- 
son to  another  for  injuries  caused  by  an  unintentional 
neglect  of  duty.  In  any  given  case  it  is  attempted  to 
determine  who  is  at  fault  (i.  e.,  guilty  of  negligence) 
and  to  assess  damages  upon  the  guilty  party  for  the 
benefit  of  the  person  injured  by  the  fault.  Actionable 
negligence  may  be  defined  as  follows :  "Negligence, 
constituting  a  cause  of  civil  action,  is  such  an  omis- 
sion, by  a  responsible  person,  to  use  that  degree  of 
care,  diligence  and  skill  which  it  is  his  legal  duty  to 
use  for  the  protection  of  another  party  from  injury 
as,  in  a  natural  and  continuous  sequence,  causes  un- 
intended damage  to  the  latter."  1  An  analysis  of  this 
definition  reveals  the  essentials  of  a  cause  of  action 
for  negligence :  rH.i 

"Negligence  consists  in : 

1.  A  legal  duty  to  use  care; 

2.  A  breach  of  that  duty ; 

3.  The  absence  of  distinct  intention  to  produce 

the  precise  damage,  if  any,  which  actually 
follows. 

1  Shearman  and  Redfield  on  the  Law  of  Negligence,  §  3. 

41 


42  COMPENSATION  INSURANCE 

"With  this  negligence,  in  order  to  sustain  a  civil  ac- 
tion, there  must  concur: 

1.  Damage  to  the  plaintiff; 

2.  A  natural  and  continuous  sequence,  uninter- 

ruptedly connecting  the  breach  of  duty  with 
the  damage,  as  cause  and  effect."  2 

Before  1837  there  were  no  cases  on  the  liability  of 
a  master  to  his  servant  8  and  the  law  of  negligence 
was  applied  wholly  as  between  the  master  and  third 
parties  to  whom  he  was  liable  for  injuries  caused  by 
his  own  negligence  or  by  that  of  his  servant.4  Black- 
stone,  in  his  Commentaries,  makes  no  mention  of  the 
master's  liability  to  his  servant.  The  law  of  negli- 
gence was  not  applied  to  the  internal  affairs  of  an  in- 
dustrial group,  probably  for  the  reason  that,  in  early 
times,  such  groups  were  on  much  the  same  basis  as 
the  family  and  regulation  of  the  personal  relations  of 
the  members  was  accomplished  without  appeal  to  the 
courts. 

EMPLOYERS'  LIABILITY 

Beginning  with  Lord  Abinger's  decision  in  the  case 
of  Priestly  v.  Fowler,5  there  has  grown  up  a  body 

2  Shearman  and  Redfield  on  the  Law  of  Negligence,  §  5. 

3  The  terms  master  and  servant  are  used  in  law  as  synonymous 
with  the  ordinary  usage  of  employer  and  employee. 

*  "It  is  an  old  and  thoroughly  established  doctrine  that,  where 
the  relation  of  master  and  servant  exists,  the  master  is  responsible 
to  third  persons  for  the  damage  caused  by  the  wrongful  acts  or 
omissions  of  his  servants,  in  the  course  of  their  employment  as 
such."  Shearman  and  Redfield,  op.  cit.,  §  141.  This  rule  is 
known  as  the  doctrine  of  respondcat  superior. 


THE  LAW  OF  NEGLIGENCE  43 

of  law  defining  the  liability  of  an  employer  to  his  serv- 
ant for  personal  injuries.  The  law  of  employers' 
liability  follows  the  general  principles  of  the  law  of 
negligence  but  has  some  features  peculiar  to  itself.6 
There  are  certain  legal  duties  of  protection  which  the 
master  owes  to  his  servant,  to  whom  he  is  liable  in 
damages  for  the  injurious  consequences  of  his  neglect 
to  use  due  care  in  the  performance  of  such  duties.7 
These  duties  are  :  8 

1.  To  employ  suitable  fellow  servants. 

The  master  must  "use  reasonable  care  in  se- 
lecting suitable  and  sufficient  co-servants." 

2.  To  establish  and  promulgate  proper  rules. 

The  nature  of  the  rules  required  is  deter- 
mined by  the  character  of  the  business — 
some  employments  requiring  no  rules.  "Or- 
dinary diligence"  in  establishing  and  enforc- 
ing rules  is  sufficient. 

3.  To  provide  a  safe  place  to  work. 

'  'It  is  the  master's  duty  to  exercise  reason- 
able care  in  furnishing  those  things  which  go 
to  make  up  the  plant  and  appliances,  so  as 
to  have  them  at  the  outset  reasonably  safe 

~(~ 

"There  is  some  dispute  among  authorities  as  to  whether  these 
features  are  a  natural  application  of  the  established  principles  of 
the  common  law  of  negligence  or  are  the  result  of  the  economic 
philosophy  of  the  judges  witli  respect  to  the  peculiar,  relation  of 
master  and  servant.  For  discussions  from  different  points  of 
view  see  Bohlen,  "Voluntary  Assumption  of  Risk,"  and  Burdick, 
"Is  Law  the  Expression  of  Class  Selfishness?" 

1  V.  supra,  analysis  of  definition  of  negligence,  pp.  41,  42. 

8  Burdick,  The  Law  of  Torts,  pp.  184  ff. 


44  COMPENSATION  INSURANCE 

for  the  work  of  the  servants  who  are  en- 
gaged in  the  general  employment,  and  fur- 
ther, to  exercise  reasonable  care,  by  means 
of  inspection  and  repairs,  when  needed,  to 
keep  the  plant  and  appliances  reasonably 
safe/  "  9 

4.  To  furnish  safe  appliances.10 

5.  To  warn  of  danger. 

The  master  must  warn  his  servants  and  give 
them  suitable  instructions  where  he  knows 
that  the  employment  is  dangerous  or  would 
discover  it  with  due  care,  and  where  he 
has  reason  to  believe  that  the  servant  does 
not  know  of  the  danger  and  would  not 
discover  it.  The  master's  duty  is  to  do 
"what  a  prudent  master  would  naturally 
do." 

If  the  master  has  properly  performed  all  of  these 
duties  he  cannot  be  held  liable  for  injuries  to  a  serv- 
ant arising  "out  of  and  in  the  course  of  his  employ- 
ment." The  test  of  performance  in  each  instance  is 
relative;  there  must  be  a  reasonable  compliance  with 
the  duty,  taking  into  consideration  the  circumstances, 
the  nature  of  the  business,  \ind  the  usual  methods  of 
conducting  it.  "  'Reasonably,  safe  means  safe  accord- 
ing to  the  usages,  habits,  a^d  ordinary  risks  of  the 
business.'  "  u  In  no  case  is  the  master  deemed  to  be 

8  Smith  v.  Erie  Ry.  Co.,  67  N.  J.  L.  636,  quoted  by  Burdick. 

10  V.  supra,  under  third  duty  of  master. 

11  Titus  v.  Bradford,  etc.,  Ry.,  136  Pa.  618,  quoted  by  Burdick. 
Italics  not  in  original. 


THE  LAW  OF  NEGLIGENCE  45 

a  guarantor  of  the  safety  of  his  employees;  his  duty 
extends  only  to  the  exercise  of  proper  diligence.  These 
duties  are,  however,  personal  and  the  master  can  not 
relieve  himself  of  responsibility  for  their  performance 
by  delegating  them  to  another. 

Proof  of  Liability. — The  servant,  in  order  to  re- 
cover damages  for  a  personal  injury,  has  the  burden  of 
proof  of  two  points :  first,  that  the  master  failed  to 
exercise  due  care  in  the  performance  of  his  duties; 
and  second,  that  his  failure  was  the  proximate  cause 
of  the  injury.  To  establish  the  first  point  it  must  be 
shown  that  one  or  more  of  the  requirements  of  due 
care,  as  outlined  above,  has  not  been  complied  with; 
to  establish  the  second,  it  is  necessary  to  show  that 
the  absence  of  due  care  operated  efficiently  through 
an  unbroken  chain  of  events  to  produce  the  injury 
complained  of. 

In  an  action  brought  by  a  servant  to  recover  dam- 
ages for  personal  injury  the  master  may  avail  him- 
self of  certain  well-defined  defenses.  He  may  al- 
lege that  the  servant  assumed  the  risk  of  his  injury, 
that  the  injury  was  caused  by  the  negligence  of  a  fel- 
low-servant, or  that  the  plaintiff  contributed  negli- 
gently to  its  occurrence.  The  principles  governing 
these  defenses  have  been  embodied  in  three  legal  doc- 
trines; the  doctrine  of  assumption  of  risk,  the  doctrine 
of  common  employment,  and  the  doctrine  of  contribu- 
tory negligence. 

Assumption  of  Risk. — Under  the  doctrine  of  as- 
sumption of  risk  it  is  held  that  a  master  is  not  liable 
to  his  servant  for  injuries  resulting  from  the  ordi- 
nary risks  of  employment  of  which  the  servant  is  fully 


46  COMPENSATION  INSURANCE 

aware.  "The  general  rule,  resulting  from  considera- 
tions as  well  of  justice  as  of  policy,  is,  that  he  who 
engages  in  the  employment  of  another  for  the  per- 
formance of  specified  duties  and  services,  for  com- 
pensation, takes  upon  himself  the  natural  and  ordi- 
nary risks  and  perils  incident  to  the  performance  of 
such  services.  .  .  ."  12  While  the  principle  of  this 
doctrine  is  not  peculiar  to  the  relation  of  master  and 
servant,  it  is  most  frequently  used  in  actions  involving 
that  relation,  and  some  courts  have  held  that  assump- 
tion of  the  risks  of  employment  is  an  implied  term 
of  the  contract  of  service.  In  certain  states  the  doc- 
trine has  been  applied  to  relieve  the  master  of  liability 
arising  from  actual  negligence  or  from  violation  of 
statutes  requiring  the  installation  of  safety  devices 
where  it  could  be  shown  that  the  servant  had  knowl- 
edge of  the  master's  conduct.13 

Common  Employment. — The  doctrine  of  common 
employment  or  the  "fellow-servant  rule"  relieves  the 
employer  of  liability  if  he  can  show  that  the  accident 
on  account  of  which  damages  are  sought  was  the  re- 
sult of  negligence  on  the  part  of  a  fellow-servant  of 
the  injured  employee.  In  its  most  extreme  form  it  is 
applied  to  all  servants  working  for  the  same  master, 
regardless  of  the  nature  of  their  duties.  The  doctrine 
was  suggested  in  the  decision  in  Priestly  v.  Fowler,1* 
an  English  case,  but  was  first  definitely  stated  in  Mur- 

™Farwcll  v.  B.  &  W.  R.  R.  Corp.,  38  Am.  Decis.  339  (1842). 

"The  master,  however,  is  generally  held  liable  for  injuries  aris- 
ing from  a  defect  which  he  has  promised  to  remedy,  for  a  rea- 
sonable time  after  the  promise  is  made. 

"3  M.  &  W.  i  (1837).  The  decision  of  the,  point  at  issue  in 
this  case  did  not  involve  the  application  of  the  fellow-servant  rule, 
v 


THE  LAW  OF  NEGLIGENCE  47 

ray  v.  South  Carolina  Railroad  Co.15  in  1841.  In  this 
case  a  fireman  brought  suit  for  injuries  caused  by  the 
negligence  of  an  engineer  who  refused  to  alter  the 
speed  of  the  train,  even  after  his  attention  had  been 
called  to  an  obstacle  on  the  track  which  gave  rise  to  the 
accident.  In  his  opinion  Justice  Evans  asserted  that  the 
plaintiff  assumed  the  risk  of  the  negligence  of  his  fel- 
low-servants and  he  was  not  allowed  to  recover  dam- 
ages. There  was,  however,  a  very  strong  dissenting 
opinion. 

While  the  South  Carolina  decision  stands  first  in 
point  of  time,  the  case  of  Farwell  v.  Boston  and  Wor- 
cester Railroad  Corporation  1G  has  become  the  leading 
case  both  in  this  country  and  in  England.  Chief  Jus- 
tice Shaw  stated  in  his  opinion  that  the  rule  that  a 
master  should  be  liable  for  the  acts  of  his  servants 
presupposed  that  the  master  and  the  person  injured 
"stand  to  each  other  in  the  relation  of  strangers" — 
and  that  therefore  Farwell,  an  engineer,  could  not 
recover  on  the  ground  that  the  corporation  was  re- 
sponsible for  the  acts  of  a  switch-tender  by  reason 
of  whose  negligence  it  was  alleged  he  had  been  in- 
jured. If  liability  was  to  be  proved  it  must  be  shown 
that  there  was  a  contract  of  indemnification,  ex- 
press or  implied.  But  the  court  held  that  the  assump- 
tion of  the  ordinary  risks  of  the  business  by  the  serv- 
ant was  an  implied  term  of  the  contract  of  employ- 
ment, the  compensation,  "in  legal  presumption,"  be- 
ing adjusted  accordingly;  and  that  the  risk  of  a  fel- 
low-servant's negligence  was  an  ordinary  risk  of  the 

15  36  Am.  Decisions  268. 
"38  Am.  Decis.  339. 


48  COMPENSATION  INSURANCE 

employment.  "We  are  not  aware  of  any  principle 
which  should  except  the  perils  arising  from  the  care- 
lessness and  negligence  of  those  who  are  in  the  same 
employment.  These  are  perils  which  the  servant  is 
as  likely  to  know  and  against  which  he  can  as  effec- 
tually guard,  as  the  master.  They  are  perils  incident 
to  the  service,  and  which  can  be  as  distinctly  fore- 
seen and  provided  for  in  the  rate  of  compensation  as 
any  others." 

Whether  this  rule  is  an  exception  to  the  doctrine  of 
respondeat  superior  or  a  perfectly  natural  and 
logical  application  of  the  doctrine  of  assumption  of 
risk  is  a  mooted  point.  It  is  sufficient  to  note  that 
it  is  applied  only  to  the  relation  of  master  and  serv- 
ant. 

Contributory  Negligence. — Under  the  older  doc- 
trine of  the  common  law  one  who  was  injured  by  the 
negligence  of  another  was  nevertheless  barred  from 
the  recovery  of  damages  if  he  had,  by  his  own  negli- 
gence, in  any  way  contributed  to  the  occurrence  of  the 
injury.  The  present  doctrine  is  less  harsh,  but  con- 
tributory negligence  will  still  bar  recovery  if  it  is  a 
direct  cause  of  the  injury. 

Burden  of  Proof. — In  an  action  to  recover  damages 
from  a  master  on  account  of  injury  the  burden  of 
proof  is  on  the  plaintiff  to  show : 

1.  That  the  master  was  negligent  in  the  perform- 

ance of  his  legal  duties. 

2.  That  the  negligence  of  the  master  was  the  proxi- 

mate cause  of  the  injury. 

3.  If  the  injury  was  caused  by  the  negligence  of 


THE  LAW  OF  NEGLIGENCE  49 

another  servant,  that  he  was  not  a  fellow- 
servant. 

Provided  the  plaintiff  has  established  the  above 
points,  in  order  to  escape  liability  the  burden  of  proof 
is  on  the  defendant  to  show : 

1.  That  the  servant  assumed  the  risk  of  the  injury, 

or 

2.  That  the  servant  by  his  own  negligence  contrib- 

uted to  the  occurrence  of  the  injury.17 

Death  Limitation. — The  common  law  doctrine  that 
right  of  action  for  personal  injury  expires  with  the 
death  of  the  person  injured  18  also  operates  to  relieve 
the  employer  of  liability. 

Contracting  Out. — It  has  been  the  practice  of  some 
employers  to  require  their  employees  to  sign  a  contract 
exempting  them  from  all  liability  on  account  of  per- 
sonal injury,  and  such  contracts  have  been  sustained 
under  the  common  law. 

MODIFICATIONS  OF  THE  COMMON  LAW 

The  common  law  of  employers'  liability  has  been 
modified  to  a  considerable  extent,  both  by  statute  and 
by  judicial  interpretation.  The  doctrine  of  assump- 
tion of  risk  has  been  made  inoperative  in  the  case  of 
injuries  arising  through  the  violation  of  safety  stat- 

17  While  this  is  the  rule  in  England,  in  the  U.  S.  Supreme  Court, 
and  in  the  majority  of  the  state  courts,  the  courts  of  certain  states 
place  the  burden  of  proof  on  the  plaintiff  to  show  an  absence  of 
contributory  negligence.    This  is  true  of  the  courts  of  Conn.,  111., 
Ind.,  la.,  La.,  Me.,  Mass.,  Mich.,  Miss.,  N.  Y.  and  N.  C. 

18  Actio  personalis  moritur  cum  persona. 


50  COMPENSATION  INSURANCE 

utes  by  the  employer,19  and  the  doctrine  of  compara- 
tive negligence,  to  the  effect  that  damages  shall  be  re- 
duced in  proportion  to  the  negligence  attributable  to 
the  employee,  has,  in  some  instances,  replaced  the 
ruling  that  contributory  negligence  is  an  absolute  bar 
to  recovery.20  "Contracting  out"  has  been  prohibited 
in  practically  every  state,  and  the  death  limitation  has 
been  removed  to  permit  surviving  relatives  to  recover 
damages  for  the  death  of  an  employee.  The  burden 
of  proof  has,  in  some  states,  been  shifted  so  as  to  lay 
a  heavier  responsibility  on  the  employer. 

Modifications  of  the  Fellow-servant  Rule. — The 
doctrine  of  common  employment  has  been  modified  to 
a  great  extent,  both  by  limiting  the  definition  of  a 
fellow-servant  and  by  depriving  the  employer  entirely 
of  this  means  of  defense.  In  its  extreme  application 
the  common  law  considers  all  employees  of  the  same 
master  to  be  fellow-servants.  But  many  courts  have 
used  other  tests  than  that  of  mere  common  employ- 
ment to  determine  the  status  of  a  servant  in  rela- 
tion to  another  who  has  been  injured  through  his 
negligence.  One  test  is  based  on  the  nature  of  the 
act  performed — if  the  servant  is  "employed  to  per- 
form an  act,  incident  to  any  of  the  five  classes  of  duties 
which  the  law  imposes  upon  the  master  ...  he  is,  as 
to  that  act,  a  vice -principal2'1 — a  true  representative 
of  his  master — and  his  negligence  is  the  master's 
negligence.  If  employed  to  do  any  other  act,  he  is  a 
mere  servant,  no  matter  what  his  rank,  and  for  in- 

19  E.  g.,  Ohio,  Mass.,  Federal  Employers'   Liability  Act. 

20  E.  g.,  Cal.,  Ga.,  Ore.,  Federal  Employers'  Liability  Act. 

21  Italics   not   in  original. 


THE  LAW  OF  NEGLIGENCE  51 

juries  resulting  to  fellow-servants  from  his  miscon- 
duct, the  master  is  not  liable."  22  This  test  has  been 
adopted  by  the  Supreme  Court  of  the  United  States 
and  by  most  of  the  state  courts.  A  second  test  is  that 
of  the  rank  or  grade  of  employment  of  the  servant 
through  whose  negligence  the  injury  is  caused — 
"  'where  one  servant  is  placed  by  his  employer  in  a 
position  of  subordination  to,  and  subject  to  the  orders 
and  control  of  another,  and  such  inferior  servant, 
without  fault,  and  while  in  the  discharge  of  his  duties, 
is  injured  by  the  negligence  of  the  superior  servant?* 
the  master  is  liable  for  such  injury.'  "  24  This  rule, 
which  originated  in  Ohio,  has  been  accepted  by  the 
courts  of  several  states,25  while  others  have  incorpo- 
rated it  in  statutes.26  A  third  test  is  provided  by  the 
different  department,  or  consociation,  rule.  "Under 
this  rule  servants  in  different  departments"  or  those 
"not  brought  into  such  personal  relations  that  they 
may  exercise  an  influence  upon  each  other  promotive 
of  their  mutual  safety,  are  not  fellow-servants."  27 
It  has  been  adopted  by  the  courts  in  seven  states  28  and 
has  been  applied  to  railroads  by  statute  in  five.29 
Statutes  have  also  been  passed  completely  abrogat- 


22  Burdick,  The  Law  of  Torts,  p.  207. 
33  Italics  not  in  original. 

24  Berea  Stove  Co.  v.  Kraft,  31  Ohio  St.,  287  (1877),  quoted  by 
Burdick. 

25  111.,  La.,  Neb.,  Tenn.,  Tex.,  Utah,  and  in  a  modified  form,  Ky. 

26  Ala.,  Mass.,   N.  Y.,  N.  J.,  Vt,  Penn.,  and  as  to  railroads, 
Miss.,  Mo.,  O.,  Ore.,  S.  C,  Utah,  Va. 

27  Bailey  on  Personal  Injuries,  p.  1551. 

28  111.,  Ky.,  La.,  Mo.,  Neb.,  Utah,  and  as  to  railroads,  Tenn. 

29  Miss.,   Mo.,   S.   C,  Utah,  Va. 


52  COMPENSATION  INSURANCE 

ing  the  fellow-servant  rule  30  or  abolishing  it  in  cer- 
tain industries.31  In  general  the  various  "fellow-serv- 
ant statutes"  may  be  classified  under  five  heads: 

i.  Statutes  entirely  abolishing  the  defense  of  fellow- 
servants  as  to  all  employers  and  all  em- 
ployees. 

2..  Statutes  entirely  abolishing  the  defense  of  fellow- 
servants  as  to  employees  of  railroads. 

3.  Statutes  limiting  the  defense  of  fellow-servants 

as  to  employees  generally. 

4.  Statutes  limiting  the  defense  of  fellow-servants 

as  to  all  corporations. 

5.  Statutes  limiting  the  defense  of  fellow-servants 

as  to  employees  of  railroads. 

6.  Statutes  merely  declaratory  of  the  common  law 

rule.     Most  of  such  statutes  have  been  re- 
pealed by  later  statutes.32 

HISTORICAL  DEVELOPMENT 

The  first  attempt  to  modify  the  common  law  of  em- 
ployers' liability  by  statutory  enactment  was  made  in 
England  in  1880,  when  "The  Employers'  Liability 
Act"  was  passed  by  Parliament.  This  act  provided 
for  a  modification  of  the  fellow-servant  rule  and  en- 
abled the  personal  representatives  of  a  deceased  em- 

80Cal.  and  Colo. 

31  For  a  complete  consideration  of  this  point  see  Bailey,  op.  cit., 

p.  1553  ff. 

32  This   classification   is  given   in  Bailey,   op.   cit.,  pp.    i553~54- 
Volume  II.  of  this  work  is  wholly  given  over  to  the  employer's 
defenses  and  their  modification. 


THE  LAW  OF  NEGLIGENCE  53 

ployee  to  recover  damages  for  death  caused  by  negli- 
gence. The  first  statute  to  be  passed  in  this  country 
was  enacted  in  Alabama  in  1885  and  was  followed 
by  the  Massachusetts  act  of  1887.  Both  of  these 
"employers'  liability  acts,"  as  well  as  those  of  several 
other  states,  were  modeled  closely  after  the  English 
statute.  A  majority  of  the  states  have  now  passed 
laws  defining  an  employer's  liability  to  his  employee, 
practically  all  of  which  are  in  the  nature  of  a  limita- 
tion on  the  employer's  defenses.  A  federal  statute 
was  enacted  in  1908  to  apply  to  inter-state  rail- 
roads. 

The  law  of  employers'  liability  has  developed  in 
sympathy  with  the  trend  of  law  and  opinion  in  other 
fields.  When  the  first  cases  involving  the  relation  of 
master  and  servant  were  decided  the  doctrines  of  in- 
dividualism and  laissez  faire  were  widely  accepted  and 
the  early  decisions  reflected  the  prevailing  philosophy. 
To  be  sure,  the  rules  laid  down  in  employers'  liabil- 
ity cases  can  be  deduced  from  established  principles  of 
the  general  law  of  negligence  but  the  rigidity  of  their 
application  depends  largely  on  the  economic  philoso- 
phy of  the  presiding  judge.  Reasoning  from  the  prin- 
ciple of  respondeat  superior,  it  would  seem  that  the 
master  could  be  held  liable  for  the  consequences  of 
acts  of  fellow-servants  quite  as  logically  as  he  was 
exempted  from  them  under  the  assumption  of  risk 
doctrine.  Speaking  of  the  fellow-servant  rule  an  emi- 
nent English  jurist  says,  "The  Courts,  between  1830 
and  1840,  curtailed  the  extent  of  an  employer's  liabil- 
ity by  grafting  upon  it  an  anomalous  limitation.  .  .  . 
It  belonged  to  the  era  of  individualism,  and  was  sup- 


54  COMPENSATION  INSURANCE 

ported  by  the  economic  theory,  of  dubious  soundness, 
that  when  a  person  enters  into  any  employment  .  .  . 
the  risks  naturally  incident  to  his  work  are  taken  into 
account  in  the  calculation  of  his  wages."  33  That 
Chief  Justice  Shaw  in  the  Farwell  case  did  not  base 
his  decision  wholly  on  grounds  of  strict  legal  logic 
is  evident  from  his  statement  that  "it  is  competent 
for  courts  of  justice  to  regard  considerations  of  policy 
and  general  convenience,  and  to  draw  from  them  such 
rules  as  will,  in  their  practical  application,  best  pro- 
mote the  safety  and  security  of  all  parties  concerned." 
So  in  cases  involving  the  doctrines  of  contributory  neg- 
ligence and  assumption  of  risk  the  tests  of  the  circum- 
stances which  shall  justify  their  application  are  quite 
likely  to  be  colored  by  the  economic  philosophy  of  the 
judges.  It  has  already  been  pointed  out  that  tests 
of  varying  severity  have  been  applied  under  the  fel- 
low-servant rule  to  determine  who  shall  be  consid- 
ered fellow-servants. 

With  changes  in  the  organization  and  methods  of 
industry  the  inadequacy  of  the  philosophy  of  laissez 
faire  and  the  injustice  of  the  common  law  principles 
of  employers'  liability  became  increasingly  evident  and 
there  developed  a  desire  to  remove  some  of  the  limita- 
tions on  the  employee's  right  of  recovery.  That  this 
desire  manifested  itself  largely  in  the  form  of  statutes 
is  probably  due  to  the  fact  that  legislative  bodies  are 
more  responsive  to  public  opinion  than  is  the  bench, 
and  also  because  judges  are  loath  to  run  counter  to  a 
well-established  body  of  legal  doctrine.  It  was  nat- 

83  Dicey,  "Law  and  Opinion  in  England,"  p.  280. 


THE  LAW  OF  NEGLIGENCE  55 

ural  that  the  fellow-servant  rule,  which  gave  rise  to 
the  greatest  injustice,  should  first  be  attacked,  and  the 
early  "employers'  liability  acts"  had  as  their  main  pur- 
pose the  placing  of  an  injured  servant  in  the  same  le- 
gal position  as  a  stranger  if  the  injury  was  caused 
under  certain  circumstances.  These  laws  also  re- 
moved the  death  limitation  but  limited  the  amount 
which  might  be  recovered  either  by  the  injured  serv- 
ant or  by  his  heirs.34  These  and  succeeding  statutes 
have  attempted  to  equalize  the  advantages  of  employer 
and  employee  and  have  put  into  effect  a  philosophy 
which  recognizes  that  individualism  means  exploita- 
tion and  that  the  state  must  lay  down  positive  rules 
to  secure  justice  between  master  and  servant. 

The  Federal  Employers'  Liability  Act  of  1908, 
modifying  all  of  the  old  doctrines  by  which  the  em- 
ployer sought  to  escape  liability,  is  in  marked  con- 
trast to  the  earlier  statutes  which  attempted  to  re- 
move only  the  most  evident  defects  of  the  common 
law. 

REFERENCES 

Burdick's  Law  of  Torts,  3d  ed.,  Banks  &  Co.,  Albany, 
N.  Y.  (1913),  Chap.  IV.  §§  3,  4,  Chap.  XV.  §§  1-4. 

Shearman  and  Redfield  on  the  Law  of  Negligence,  6th  ed. 
Edited  by  Robert  G.  Street,  Baker,  Voorhis,  &  Co., 
New  York  (1913).  Parts  I,  II,  &  VIII. 

Bailey  on  Personal  Injuries,  2d  ed.,  Callaghan  and  Co., 
Chicago  (1912). 

BOHLEN,  FRANCIS  H.  "Voluntary  Assumption  of  Risk," 
I,  II,  20  Harvard  Law  Review  14,  91  (1906). 

34  cf.  Mass.   Employers'  Liability  Act  of  1887. 


56  COMPENSATION  INSURANCE 

BURDICK,  FRANCIS  H.  "Is  Law  the  Expression  of  Class 
Selfishness?"  25  Harvard  Laiv  Review,  349  (1912). 

DICEY,  A.  V.  "Law  and  Opinion  in  England,"  Macmillan, 
London  (1905).  Pp.  279-283. 


CHAPTER  V 

CRITICISM  OF  THE  SYSTEM  OF  EMPLOYERS' 
LIABILITY 

The  system  of  employers'  liability  proceeds  on  the 
theory  that  the  economic  loss  occasioned  by  an  indus- 
trial accident  should  be  borne  by  the  person  injured 
unless  he  can  show  that  some  other  person  is  directly 
responsible,  through  a  negligent  act  or  omission,  for 
the  occurrence  of  the  accident.  If  such  personal  re- 
sponsibility can  be  proved  the  guilty  party  is  liable 
in  damages  which  are  supposed  to  compensate  for  the 
loss  sustained  because  of  the  injury.  This  does  not 
mean  that  the  employee  is  considered  to  have  been  at 
fault  in  the  event  that  he  is  unable  to  attach  liability 
to  another.  Many  accidents  arise  from  the  methods 
of  carrying  on  a  business,  responsibility  for  which 
must  be  assigned  to  conditions  rather  than  persons. 
The  concept  of  personal  fault  which  is  at  the  basis 
of  employers'  liability  prevents  recovery  for  the  re- 
sults of  accidents  of  this  nature  and  the  workman 
must  bear  the  loss  incurred.  All  of  which  is  but  one 
phase  of  the  general  philosophy  of  laissez  faire  which 
holds  that  men  should  bear  the  consequences  of  their 
own  conduct  and  of  the  normal  conditions  in  which 
they  find  themselves. 

Liability  on  the  part  of  an  employer  may  be  estab- 

57 


58  COMPENSATION  INSURANCE 

lished  only  by  means  of  a  suit  at  law.  The  courts,  in 
determining  the  existence  of  fault  as  a  basis  for  lia- 
bility, are  guided  by  the  rules  of  negligence  law  and 
by  the  various  statutes  which  have  been  passed  in  mod- 
ification of  these  rules.  It  is,  therefore,  to  be  borne 
in  mind  that,  in  order  to  collect  damages,  an  em- 
ployee must  prove  legal  liability,  which  may  or  may 
not  coincide  with  one's  ideas  of  moral  liability  and 
justice. 

That  dissatisfaction  with  the  operation  of  the  law 
of  negligence  in  its  extreme  form  has  been  widespread 
is  evident  from  the  universal  enactment  of  statutes  de- 
signed to  extend  the  liability  of  employers  and  to  fa- 
cilitate recovery  by  workmen.  Limitations  have  been 
removed,  responsibility  has  been  broadened,  and  a  new 
body  of  law  created.  But  even  the  continued  attempts 
of  law-makers  over  a  period  of  nearly  forty  years 
have  failed  to  produce  a  system  of  employers'  liability 
which  satisfactorily  adjusts  the  distribution  of  eco- 
nomic loss.  Such  attempts,  where  they  have  not  been 
defeated  by  the  extremely  conservative  interpretation 
of  the  courts,  have  resulted  only  in  removing  some 
of  the  more  striking  defects  of  the  system. 

A  criticism  of  the  practical  operation  of  employers' 
liability  should  seek  to  determine  to  what  extent  it 
accomplishes  its  fundamental  purpose,  the  solution 
of  the  problem  created  by  industrial  accidents.  In 
so  far  as  that  purpose  is  not  completely  accomplished 
the  system  is  defective  and  it  should  be  corrected  or 
other  means  adopted  to  the  same  end.  The  employing 
and  employed  classes  as  well  as  society  at  large  are 
concerned  in  its  contribution. 


CRITICISM  OF  EMPLOYERS'  LIABILITY      59 

The  Employee's  Criticism. — i.  A  large  share  of  in- 
dustrial accidents  are  entirely  uncompensated  and  the 
economic  loss  resulting  from  them  must  be  borne  by 
the  workman  or  his  dependents.  Figures  collected 
by  the  New  York  Employers'  Liability  Commission 
show  that,  of  114  fatal  industrial  accidents  occurring 
in  Erie  County  during  the  years  1907  and  1908,  33.3% 
were  entirely  uncompensated ;  and  of  67  fatal  cases  in 
the  Borough  of  Manhattan  during  1908,  26.9%  were 
not  compensated.1  In  Wisconsin  no  compensation 
was  paid  in  72  out  of  a  total  of  306  non-fatal  cases,  or 

23.5%  2 

A  study  of  conditions  in  Pittsburgh  showed  that 
no  payment  of  compensation  was  made  in  59  out  of 
235  cases  of  married  men  killed  in  industry,  a  percent- 
age of  25. i.3 

Nine  insurance  companies  doing  business  in  New 
York  reported  that  payments  were  made  to  em- 
ployees under  policies  assuming  the  employers'  lia- 
bility risk  in  only  one  case  for  every  eight  notices 
of  accident.4  Investigations  in  other  states  have  shown 
similar  conditions  to  exist. 

2.  Where  compensation  is  obtained  it  bears  no  true 
relation  to  economic  need.  The  table  on  page  60  shows 
the  complete  results  of  the  Erie  County  study  men- 
tioned above,  the  amount  of  compensation  recovered 
being : 


1  Report  to  the  Legislature  of  the  State  of  N.  Y.,  1910,  p.  20. 

2  Reports  of  the  Bureau  of  Labor  and  Industrial  Statistics, 
V.   13,  p.  54- 

'Eastman,  "Work  Accidents  and  the  Law,"  p.  121. 

4  Report  to  the  Legislature  of  the  State  of  N.  Y.,  1910,  p.  25. 


60  COMPENSATION  INSURANCE 

o  in  ^8  casesl   , 

a,  -  8 1  out  of  103,  or  78.6%  of 

$100  or  less  in     9  L 

a.  ^         .  closed  cases. 

$101    to   $500   m  34 

$501  to  $2000  in  14     " 

Over  $2000  in    8     " 

Suit  pending  in  n      " 


Total 114  cases 

Seventy-eight  and  six-tenths  per  cent  of  the  fam- 
ilies where  decisions  had  been  rendered  received  $500 
or  less  as  the  entire  compensation  to  pay  funeral  ex- 
penses and  replace  the  earnings  of  the  workman.  The 
Labor  Department  of  New  York  investigated  ten  cases 
in  which  accidents  had  left  the  workmen  in  a  totally 
helpless  condition  for  the  remainder  of  life;  in  one 
of  these  the  suit  was  still  pending  and,  in  the  other 
nine,  three  received  nothing, ,  while  none  of  the  six 
remaining  received  over  $500.  The  records  of  the 
Wayne  Circuit  Court  of  Michigan  show  that,  of  twen- 
ty-two men  partially  disabled  for  life,  twelve  received 
no  compensation,  while  the  remaining  ten  were  award- 
ed amounts  varying  from  $200  to  $5,75o.5  In  her 
study  of  accidents  in  the  Pittsburgh  district  Miss  East- 
man found  that  "for  the  death  of  53  per  cent  of  the 
married  men,  and  65  per  cent  of  the  single  men  con- 
tributing to  the  support  of  others,  no  compensation 
above  reasonable  funeral  expense  was  made ;  in  the  in- 
jury cases,  56  per  cent  of  the  married  men,  66  per 
cent  of  the  single  contributing  men,  and  69  per  cent  of 

5  Report  of  the  Employers'  Liability  and  Workmen's  Compen- 
sation Commission,  1911. 


CRITICISM  OF  EMPLOYERS'  LIABILITY      61 

the  non-contributing  men  received  nothing  to  make 
up  for«lost  income."  6  After  an  extensive  comparison 
of  economic  loss  to  workmen  and  receipts  from  em- 
ployers the  New  York  Commission  says  that  their  fig- 
ures strengthen  the  conclusion  "that  the  bulk  of  the 
accident  loss  is  borne  by  the  injured  workmen  and 
their  families.  They  [the  figures]  emphasize  also  the 
fact  that  the  results  of  the  present  law  are  arbitrary 
and  unequal,  that  a  few  of  the  injured  get  large  ver- 
dicts while  many  get  nothing.  Thus,  in  the  temporary 
disability  cases  a  comparison  of  totals  shows  that  em- 
ployers paid  nearly  one-third  of  the  loss,  but  yet  in  44 
per  cent  of  these  cases  they  paid  nothing.  In  per- 
manent partial  disability  cases,  payments  from  em- 
ployers averaged  one-third  of  the  loss  until  return  to 
work,  and  yet  over  one-third  of  these  disabled  men 
received  nothing.  In  the  in  fatal  cases  compen- 
sation averages  17.1  per  cent  of  the  first  three 
years'  loss,  but  nearly  half -of  the  dependents  got  noth- 
ing." * 

Commenting  further,  the  same  body  says,  "From 
our  detailed  investigation,  borne  out  as  it  is  by  the 
results  of  similar  studies  in  states  where  the  same 
general  law  prevails,  and  strengthened  by  testimony 
given  before  us,  we  are  brought  to  the  conclusion 
that  under  our  employers'  liability  laws  a  large  pro- 
portion (over  50  per  cent)  of  the  workmen  injured 
by  accidents  of  employment  and  the  dependents  of 
those  killed  get  nothing  or  next  to  nothing,  and  that 

""Work  Accidents  and  the  Law,"  p.  127. 
7  Report  to  the  Legislature  of  the  State  of  New  York,  1910, 
P-  23. 


62  COMPENSATION  INSURANCE 

only  a  very  small  proportion  recover  an  amount  that 
is  in  any  way  commensurate  with  their  loss."  8 

3.  In  order  to  recover  damages  it  is  necessary  for 
the  plaintiff  to  sacrifice  a  considerable  portion  of  the 
gross  amount  in  lawyer's  fees  and  costs.  The  Labor 
Department  of  New  York  found  that  in  151  acci- 
dent cases,  97  of  which  were  settled  directly  between 
the  parties,  "the  total  amount  of  plaintiffs'  fees  and 
costs  amounted  to  22.7  per  cent  of  the  total  gross  re- 
ceipts from  employers."  The  contingent  fee  system, 
under  which  a  lawyer  agrees  to  prosecute  a  case  in 
return  for  a  percentage  of  whatever  damages  he  may 
recover,  is  a  large  factor  in  increasing  legal  costs. 
Agreements  of  this  type  are  common  in  employers'  lia- 
bility cases  since  the  workman  is  usually  unable  to 
employ  an  attorney  on  any  other  basis  and  since  "am- 
bulance chasers,"  the  crooks  of  the  legal  profession, 
actually  solicit  this  kind  of  business.9  In  New  York 
the  following  results  were  obtained  in  an  investigation 
of  51  cases.10 

Size  of  Fee                                                            No.  of  Cases 
Less  than  25  per  cent  in 14 

25  per  cent  to  34.9  per  cent  in 16 

35  per  cent  to  49.9  per  cent  in 7 

50  per  cent  and  over 14 

Total 51 

8  Report  to  the  Legislature  of  the  State  of  New  York,  1910, 
p.  26. 

9  The  workman  is,  of  course,  at  a  great  disadvantage  in  being 
obliged  usually  to  employ  an  inferior  attorney. 

10  Report  to  the  Legislature  of  the  State  of  New  York,  1910, 
P- 3r. 


CRITICISM  OF  EMPLOYERS'  LIABILITY      63 

And  these  conditions  are  in  no  way  peculiar  to  New 
York. 

4.  Compensation  is  frequently  received  only  after 
long  delay  spent  in  litigation.  The  courts  are  so  over- 
loaded with  work  that  delays  of  two  years  in  bring- 
ing cases  to  trial  are  not  uncommon  and  when  it  be- 
comes necessary  to  follow  a  case  through  a  succes- 
sion of  appeals  it  may  take  eight  years  or  more  be- 
fore a  final  verdict  is  reached.  During  all  this  time 
the  workman  or  his  dependents  are  receiving  no  com- 
pensation and  may  be  undergoing  additional  expense 
for  medical  treatment  or  court  costs. 

The  Employer's  Criticism. — i.  The  employer  has 
been  forced  by  the  system  to  pay  out  large  sums  of 
money  for  the  defense  of  claims  and  in  satisfaction 
of  verdicts,  much  of  which  has  failed  to  reach  his 
injured  men.  If  he  employs  an  insurance  company 
to  fight  claims  a  half  or  more  of  his  premiums  goes  to 
pay  the  salaries  of  officers,  the  commissions  of  agents, 
and  the  expenses  of  conducting  the  insurance  business. 
If  he  maintains  a  claim  department  of  his  own  he  must 
employ  expert  lawyers,  bear  the  court  costs  in  liti- 
gated cases,  and  satisfy  claims  which  are  compromised 
or  in  which  an  adverse  verdict  is  rendered  by  the 
courts. 

2.  Friction  between  employer  and  employed  often 
arises  out  of  claims  for  damages  whether  or  not  they 
reach  the  stage  of  law-suits.  The  workman  feels  that 
he  should  get  compensation  for  injuries  incurred  in 
the  course  of  employment  while  the  employer  is  in- 
clined to  think  that  any  aid  he  may  give  is  a  matter 
of  generosity  rather  than  of  duty.  If  the  question 


64  COMPENSATION  INSURANCE 

comes  before  the  courts  the  friction  is  increased  and 
the  enforced  expenditure  creates  actual  antagonism. 
The  New  York  Commission  says :  "That  the  pres- 
ent law,  with  its  uncertain  and  uneven  chances,  pro- 
motes distrust  and  ill-will  between  employers  and  em- 
ployees to  a  serious  extent  we  are  convinced  from  the 
testimony  of  both.  In  our  public  hearings  and  in 
the  replies  received  to  our  inquiries  this  was  a  very 
frequent  complaint."11  That  this  situation  results 
in  lowered  efficiency  cannot  be  doubted. 

Society's  Criticism. — Since  the  aim  of  organized 
society  is  to  promote  the  best  interests  of  all  the  classes 
composing  it,  any  system  which  operates  to  the  disad- 
vantage of  a  class  is  to  some  extent  opposed  to  the 
purposes  of  society  itself.  Therefore  society  is  con- 
cerned with  the  criticisms  of  the  employer  and  of  the 
employee  and  should  seek  to  remove  the  conditions 
which  give  rise  to  them.12  But  there  are  other  de- 
fects which  do  not  concern  these  classes  so  intimately 
and  which  do  affect  society  at  large. 

1.  The  cost  of  hearing  negligence  cases  represents 
a  very  large  share  of  the  expense  of  maintaining  the 
courts.     Estimates  vary  in  assigning  anywhere  from 
one-fifth  to  two-thirds  of  the  time  of  the  courts  to  this 
form  of  litigation. 

2.  Uncompensated  or  insufficiently  compensated  in- 
dustrial accidents  give  rise  to   economic  dependence 


11  Report  to  the  Legislature  of  the  State  of  New  York,  1910, 

p.  33- 

12  This  is  particularly  true  of  the  economic  waste  involved  in 
lawyer's  fees  and  the  maintenance  of  claim  organizations  which 
serve  no  constructive  purpose. 


CRITICISM  OF  EMPLOYERS'  LIABILITY      65 

and  destitution,  the  burden  of  which  is  transferred  to 
society  through  various  forms  of  charitable  relief. 

3.  Other  less  specific  evils  are  the  bad  moral  effect 
of  enforced  pauperization,  and  the  misrepresentation 
and  perjury  induced  by  the  desire  to  win  law-suits. 

Summary. — The  defects  of  the  system  have  been 
ably  summarized  as  follows: — 

"i.  It  is  wasteful: 

(a)  The  state  expends  a  large  amount  in  fruit- 
less litigation. 

(b)  Employers  spend  a  large  amount,  as  the  re- 
sult of  work-accidents,  only  a  small  part  of 
which  is  actually  paid  in  settlement  of  acci- 
dent claims. 

(c)  The  injured  employees  spend  nearly  half  of 
what  they  get  in  settlements  and  damages  to 
pay  the  costs  of  fighting  for  them. 

"2.  It  is  slow;  recovery  is  long  delayed,  while  the 
need  is  immediate. 

"3.  It  fosters  misunderstanding  and  bitterness  be- 
tween employer  and  employees. 

"4.  It  encourages  both  parties  to  dishonest  meth- 
ods." 13 

Other  Attempts  to  Solve  the  Accident  Problem. — 
Three  other  methods  of  solving  the  economic  problem 
of  industrial  accidents  have  been  tried ;  the  encourage- 
ment of  saving  by  the  workman,  industrial  accident 
insurance,  and  corporate  relief  and  pension  schemes. 
None  of  these  approaches  a  sufficient  solution.  Even 

13  Eastman,  "Work  Accidents  and  the  Law,"  p.  206. 


66  COMPENSATION  INSURANCE 

where  a  workman  has  the  will  to  save,  his  earnings 
do  not  permit  an  adequate  accumulation,  and  if  they 
cease  at  an  early  age  the  difficulty  is  increased.  In- 
dustrial accident  insurance,  sold  to  workingmen  on 
the  weekly  or  monthly  payment  plan  is  bought  at  an 
excessive  cost,  and  rarely  returns  benefits  commen- 
surate with  loss  of  income.  The  relief  associations 
of  certain  corporations  afford  substantial  help,  but  they 
are  far  from  giving  adequate  compensation  and  ac- 
ceptance of  their  benefits  usually  involves  conditions 
highly  disadvantageous  to  the  employee.  Besides,  they 
are  not  always  safe  or  permanent. 

Conclusion. — Having  viewed  the  problem  arising 
from  industrial  accidents  and  the  failure  of  the  pres- 
ent system  of  employers'  liability  as  a  method  of  solu- 
tion, the  next  logical  step  is  to  seek  a  real  remedy. 
Can  this  be  found  in  an  amendment  of  the  present 
system  of  law,  in  the  extension  of  present  voluntary 
methods,  or  must  a  new  scheme  be  devised  and  sub- 
stituted for  the  old  one?  (The  history  of  legislative 
and  judicial  attempts  to  mold  the  common  law  into 
an  adequate  remedy  and  the  testimony  of  experts  rep- 
resenting all  interests  point  to  the  undeniable  fact  that 
the  system  of  employers5  liability  is  basically  wrong 
and  that  any  attempt  at  a  solution  which  does  not  re- 
move this  fundamentally  unsound  body  of  doctrine 
will  be  abortive.)  The  same  is  true  of  the  various  vol- 
untary substitutes  which  have  been  tried.  Thirty-two 
of  our  states,14  appreciating  these  facts,  have  dis- 
carded the  old  common  law  doctrines  and  have  substi- 

14  Dec.  i,  1916. 


CRITICISM  OF  EMPLOYERS*  LIABILITY      67 

tilled  the  more  just  and  practical  scheme  of  Work- 
men's Compensation. 

REFERENCES 

Report  to  the  Legislature  of  the  State  of  New  York  by 
the  Commission  ...  to  inquire  into  the  question  of 
employers'  liability  and  other  matters.  First  Report, 
March  19,  1910. 

RUBINOW,  I.  M.  "Social  Insurance,"  Holt,  New  York1 
(1913).  Chap.  VI. 

EASTMAN,  CRYSTAL.  "Work  Accidents  and  the  Law," 
Charities  Publication  Committee,  New  York  (1910). 
Chap.  XIII. 

Report  of  the  Employer's  Liability  and  Workmen's  Com- 
pensation Commission.  Lansing,  Michigan  (1911). 

Reports  of  the  Bureau  of  Labor.  Madison,  Wisconsin 
(1907-8).  Vol.  XIII,  Parti. 


CHAPTER  VI 
THE  THEORY  OF  WORKMEN'S  COMPENSATION 

The  problem  of  compensating  workmen  for  loss  re- 
sulting from  industrial  accidents  is  essentially  social 
and  economic;  social,  because  it  is  a  direct  concern  of 
organized  society;  economic,  because  the  loss  must  be 
measured  in  terms  of  economic  welfare  and  because 
the  compensation  should  be  proportioned  to  the  loss 
so  measured. .  It  should  be  remembered  that  the  legal 
problem  is  secondary  although  vital ;  it  consists  in  ex- 
pressing, in  the  form  of  legislation,  the  judgment  of 
society.  Such  legislation  lays  down  rules  governing 
the  method  of  compensation  and  empowers  public  offi- 
cials to  administer  and  interpret  the  law,  but  it  is 
only  a  vehicle  for  the  accomplishment  of  socio-eco- 
nomic purposes. 

It  is  evident  that  the  methods  which  have  been  used 
in  the  past  and  which  are  still  in  use  in  sixteen  states 
have  become  increasingly  unsatisfactory.  The  opera- 
tion of  the  system  of  employers'  liability  has  resulted 
in  injustice  to  all  classes  and,  with  the  development 
of  industrial  conditions,  the  injustice  has  been  aggra- 
vated. .Commencing  with  the  Industrial  Revolution 
in  the  early  nineteenth  century  the  conditions  under 
which  industry  has  been  carried  on  have  gradually 
changed  and  a  need  for  some  new  method  of  compen- 

68 


THEORY  OF  WORKMEN'S  COMPENSATION    69 

sation  has  been  created.  This  need  has  been  brought 
about  by  changes  in  industrial  relations  and  by  the  in- 
troduction of  machinery.  Alongside  the  industrial  de- 
velopment there  has  grown  up  a  new  body  of  social 
thought  demanding  recognition  of  changed  conditions 
and  seeking  some  means  of  providing  adequate  and 
just  compensation  for  workmen  who  suffer  loss 
through  industrial  accidents. 

Changes  in  Industrial  Relations. — The  change  from 
the  domestic  system  of  industry  to  the  factory  system 
involved  a  complete  reorganization  of  the  personal 
factors  in  industry  and  created  those  labor  problems 
which  are  due  to  the  differentiation  of  employer  and 
employed.  It  is  natural  that  the  law  of  master  and 
servant  should  have  developed  part  passu  with  the 
factory  system  and  with  the  increasing  opposition  of 
interests  of  the  two  great  social  classes.  The  feeling 
of  opposition  and  the  disputes  and  injustice  which 
have  arisen  from  it  were  inherent  in  the  growth  of  a 
new  method  of  conducting  business,  one  in  which  the 
principals  were  not  properly  orientated.  The  change 
in  industrial  relations  evolved  in  three  different  as- 
pects : 

i.  Under  the  domestic  system  all  work  was  done  on 
a  personal  basis,  the  workman  was  a  member  of  his 
employer's  family  and  the  employer  was  no  more 
than  a  highly  developed  workman.  It  was  quite  pos- 
sible for  any  artisan,  having  passed  through  the  stages 
of  apprentice  and  journeyman,  to  become  a  master 
himself.  Socially  all  were  on  the  same  level  and  per- 
sonal and  industrial  interests  were  mutual.  In  case 
of  injury  and  sickness  the  master  was  expected  to  care 


70  COMPENSATION  INSURANCE 

for  the  members  alike  of  his  industrial  and  of  his  fam- 
ily group.  But  the  factory  system  demanded  capital, 
usually  more  than  any  one  man  was  prepared  to  fur- 
nish, and  the  modern  corporation  was  created  to  sat- 
isfy the  demand.  The  corporation  consists  of  a  group 
of  men  who  furnish  capital  and  whose  chief  interest 
is  in  the  financial  side  of  a  business,  the  actual  carry- 
ing on  of  technical  processes  usually  being  entrusted 
to  a  hired  manager  who,  in  turn,  in  a  large  undertak- 
ing, delegates  his  functions  to  assistant  managers,  su- 
perintendents, and  foremen.  Hence  the  personal  ele- 
ment in  industrial  relations  largely  disappears — even 
v  personal  acquaintance  between  master  and  man  van- 
ishes. With  the  personal  element  gone  the  mutual  in- 
terest which  prompted  aid  and  care  is  also  lost.  The 
employer  now  looks  on  his  business  as  a  means  of  ac- 
•v^[uiring  wealth  and  power  and  the  workman  seeks  to 
secure  the  largest  possible  return  from  a  minimum 
amount  of  labor.  The  manager's  remuneration  is 
based  on  his  efficiency  in  returning  profits  to  the  em- 
ployer and  his  interests  naturally  lead  him  to  con- 
duct the  business  at  the  lowest  possible  cost.  Aid 
in  any  appreciable  amount  has,  until  very  recently  at 
least,  usually  been  denied  to  injured  workmen  and 
their  families  unless  forced  by  a  decree  of  the  court. 
Compensation  for  industrial  accidents  has  been  re- 
garded as  an  unwarranted  expense  totally  opposed  to 
the  interests  of  the  employer,  who  was  not  conscious 
of  any  direct  personal  relationship  with  his  employee. 
2.  Industrial  relations  have  become  not  only  imper- 
v  sonal  but  highly  complicated.  Division  of  labor  has 
necessitated  the  creation  of  many  departments  in  an 


THEORY  OF  WORKMEN'S  COMPENSATION    71 

industry,  each  employing  a  group  of  laborers  and  each 
contributing  a  share  of  the  work  necessary  to  manu- 
facture a  finished  product.  The  heads  of  departments 
are  responsible  to  the  superintendent  of  the  plant,  the 
superintendent  to  the  manager,  and  the  manager  to  the 
board  of  directors,  which  represents  the  stockholders. 
Besides  those  'concerned  directly  with  the  finished 
product  of  the  industry,  there  are  other  groups  which 
have  a  relation  to  the  plant  as  a  whole,  repair  men, 
construction  gangs,  and  men  concerned  with  motive 
power  and  its  transmission. 

Such  conditions  are  responsible  in  a  high  degree  for 
rendering  unsatisfactory  a  system  of  compensation 
based  on  employers'  liability.  Employers'  liability  is 
governed  by  the  principle  of  personal  fault  and  in 
order  to  establish  the  existence  of  fault  it  is  necessary 
to  prove  that  an  injury  was  caused  wholly  and  directly 
by  a  particular  person.  The  complicated  relationships 
of  the  modern  factory  system  have  rendered  this  prac- 
tically impossible,  since  the  cause  of  almost  every  acci- 
dent is  a  complex  of  the  actions  or  neglect  of  a  great 
number  of  persons,  principals  and  subordinates. 

3.  In  order  to  bring  productive  organization  to  its 
highest  efficiency  it  has  been  found  necessary  to  in- 
tegrate and  consolidate  industry  and  to  arrange  the 
units  of  a  large  corporation  so  that  each  will  contribute 
its  utmost  to  the  final  product.  In  this  process  or- 
ganization as  such  has  come  to  mean  more  to  the  suc- 
cess of  an  undertaking  than  any  other  feature.  The 
importance  of  organization  which  has  carried  with  it 
definite  rules  and  plans  has  meant  the  still  further  re- 
pression of  the  individual  and  has  minimized  his  con- 


72  COMPENSATION  INSURANCE 

tribution  to  the  final  result.  The  individual  has  been 
lost  in  the  mass  and  the  removal  of  a  workman  and 
substitution  of  another  is  now  a  less  significant  occur- 
rence than  formerly. 

Change  from  Handicraft  to  Machinery. — The  prime 
factor  in  the  establishment  of  the  present  industrial 
system  was  the  introduction  of  machinery  and  the  sub- 
stitution of  mechanical  power  for  manual  labor.  This 
has  had  two  general  effects  which  bear  directly  on  the 
problem  of  industrial  accidents : 

1.  The.  risk  of  accident  has  become  greater;  posi- 
tively, through  the  introduction  of  dangerous  machin- 
ery and  increased  speed  of  operation,  and  negatively, 
through  the  lowered  skill  of  the  workman  and  the  em- 
ployment  of   untrained   immigrant   labor.      The   im- 
provement of  methods  in  the  steel  industry  and  the 
progress  of   invention  have  constantly  enlarged  and 
complicated  machines,  and  every  enlargement  and  conv 
plication   has  increased  the   danger  to  the  operat9r. 
Superior  organizations,  improvements  in  mechanical 
arts,  and  the  production  of  finer  grades  of  construc- 
tion materials  have  increased  the  speed  at  which  ma- 
chines have  been  operated  and  have  rendered  less  de- 
liberate the  movements  of  attendants.  The  invention  of 
machines  to  perform  delicate  technical  processes  for- 
merly accomplished  only  through  hand  work  has  made 
possible  the  employment  of  a  lower  grade  of  labor- 
ers, at  once  less  able  and  less  careful.     The  inability 
of  immigrant  laborers  to  understand  the  English  lan- 
guage has  been  another  factor  in  increasing  the  prob- 
ability of  accident  occurrence. 

2.  The  use  of  machinery  to  perform  the  greater 


THEORY  OF  WORKMEN'S  COMPENSATION    1$ 

part  of  work  once  done  by  hand  has  contributed  with 
the  development  of  organization  to  the  repression  of 
the  individual.  The  workman  in  many  industries  acts 
merely  as  a  feeder  and  attendant  to  the  machine,  the 
mechanism  of  which  now  accomplishes  the  larger  and 
more  technical  part  of  the  work.  Good  machines  are 
more  important  than  skilled  workmen  and  they  have 
absorbed  much  of  the  attention  formerly  given  to  se- 
,  lecting  and  caring  for  individual  employees. 

The  Growth  of  Cities. — The  growth  of  cities  with 
large  manufacturing  populations  should  be  noted  in 
connection  with  industrial  accidents,  for  it  has  aggra- 
vated the  severity  of  the  problem.  Wages  in  cities 
seldom  exceed  the  minimum  necessary  to  sustain  life, 
and  preclude  effective  help  being  given  an  injured 
workman  by  others  of  his  class,  a  condition  obtaining 
to  a  much  less  degree  in  the  country.  If  a  man  is  not 
totally  disabled  he  is  usually  able  to  scrape  together 
a  bare  living  himself  in  the  country  districts,  but  this 
is  not  true  of  the  congested  areas  of  large  cities. 

New  Social  Ideas. — Changes  in  industrial  condi- 
tions have  made  old  theories  and  methods  of  accident 
compensation  largely  nugatory  in  actual  practice;  at 
the  same  time  new  social  ideas  have  gained  currency 
which  have  resulted  in  an  almost  complete  reversal 
of  attitude  on  the  part  of  economists,  legislators,  and 
even  employers : 

i.  The  generally  accepted  theory  of  the  limitations 
on  governmental  action  has  undergone  a  considerable 
development.  It  is  still  agreed  that  the  government 
should  undertake  only  those  tasks  which  can  be  more 
effectively  accomplished  by  its  agency  and  can  not  well 


74  COMPENSATION  INSURANCE 

be  left  to  individual  initiative  and  responsibility.  For 
long  this  was  interpreted  to  cover  only  those  affairs 
with  which  the  government  must  concern  itself  in  or- 
der to  exist,  such  as  the  maintenance  of  order,  the 
dispensation  of  justice  and  the  carrying  on  of  essen- 
tial public  works.  Governmental  interference  with 
the  affairs  of  the  individual  was  not  to  extend  beyond 
an  unavoidable  minimum.  But  now  its  function  is  of 
a  more  constructive  nature,  the  actions  of  the  individ- 
ual are  regulated  to  the  end  that  greater  social  wel- 
fare may  obtain  and  enterprises  are  undertaken  by 
government  which  might  be  carried  on,  but  less  effec- 
tively, by  individual  initiative. 

2.  The  development  of  the  concept  of  liberty  has 
been  consonant  with  the  change  in  governmental  the- 
ory.    The  older  and  negative  concept  defined  liberty 
as  freedom  from  interference,  the  newer  positive  view 
recognizes  that  restraint  and  regulation  may  result  in 
greater  real  freedom  and  wider  privileges.     In  trans- 
portation,   for   example,   regulation   of   common   car- 
riers has  thoroughly  substantiated  this  principle. 

3.  The  elimination  of  waste  through  conservation 
of  resources  has  its  application  to  industrial  accidents, 
for  every  workman  lost  through  death  or  disability 
lowers  the  efficiency  of  the  working  force  as  a  whole. 
Society  has  invested  a  certain  portion  of  its  resources 
in  bringing  men  to  the  working  age  and  social  econ- 
omy demands  the  fullest  possible  use  of  the  productive 
capacity  of  each  working  unit. 

4.  In  recent  years  there  has  been  a  considerably 
greater  interest  in  the  welfare  of  all  classes  from  a 
humane  point  of  view.     The  leisure  class  has  to  some 


THEORY  OF  WORKMEN'S  COMPENSATION     75 

extent  justified  itself  through  the  activities  of  some 
of  its  members  who  have  become  interested  in  social 
betterment  and  who  have  drawn  attention  to  the  suf- 
fering caused  by  industrial  accidents.  They  have  la- 
bored to  improve  industrial  conditions  by  eliminating 
causes  and  securing  remedial  legislation. 

5.  The  working  class  itself  has  done  much  toward 
accelerating  investigation  and  improvement  of  condi- 
tions. It  has  organized  and  become  educated  both 
through  its  own  efforts  and  through  the  aid  of  philan- 
thropists and  social  scientists  so  that  expressions  of 
.opinion  on  its  part  are  something  more  than  a  forlorn 
cry  for  help.  Education  and  organization  carry  with 
them  a  demand  for  recognition  and  a  new  kind  of 
treatment,  a  demand  for  justice  rather  than  mercy. 

WORKMEN'S  COMPENSATION 

The  application  of  modern  social  thought  to  the  in- 
dustrial accident  problem  and  to  the  unsatisfactory 
conditions  under  the  system  of  employers'  liability  re- 
sulted in  the  almost  universal  conviction  that  a  radical 
change  was  necessary,  that  there  must  be  nothing  less 
than  the  elimination  of  the  old  system  and  the  substi- 
tution of  a  basically  new  scheme.  A  complicating  fea- 
ture in  the  solution  of  the  difficulty  lay  in  the  dual  na- 
ture of  the  workman,  who  is  both  the  means  and  the 
end  of  production.  As  a  producer  he  is  expected  to 
make  the  greatest  possible  use  of  his  productive  ca- 
pacity, as  a  consumer  he  is  entitled  to  the  greatest 
possible  use  of  the  product  consistent  with  like  enjoy- 
ment on  the  part  of  other  members  of  society.  The 


76  COMPENSATION  INSURANCE 

balance  must  be  struck  in  such  a  way  as  J;o  reconcile 
these  apparently  inharmonious  viewpoints. 

The  industrial  world  has  quite  generally  agreed  on 
the  substitution  of  the  principle  of  workmen's  compen- 
sation for  that  of  employers'  liability  and  practically 
every  European  country  and  the  majority  of  the  states 
have  adopted  laws  which,  to  a  greater  or  less  degree, 
apply  the  new  principle. 

Definition  of  Workmen's  Compensation. — Work- 
men's Compensation  is  the  indemnification  of  a  work- 
man or  his  dependents  by  an  industry  for  any  eco- 
nomic loss  due  to  injuries  suffered  because  of  his  con- 
nection with  the  particular  industry.1  The  burden  of 
cost  of  compensation  is  usually  placed  upon  the  em- 
ployer as  the  representative  of  the  industry. 

Basis  of  Workmen's  Compensation. — Workmen's 
Compensation  is  variously  defended  on  grounds  of 
expediency  and  justice.  From  either  viewpoint  a 
strong  case  may  be  established;  when  both  are  con- 
sidered the  argument  is  irresistible.  The  leading 
points  urged  in  justification  of  the  principle  fall  under 
four  heads : 

i.  Industry  is  responsible  for  the  occurrence  of  a 
large  majority  of  industrial  accidents;2  therefore,  in- 
dustry should  be  compelled  to  bear  any  loss  which  may 
result.3  The  provable  majority  is  so  large  and  the  de- 

1  In  actual  practice,  of  course,  the  working  class  is  not  indem- 
nified for  the  entire  loss.  Practical  considerations  make  it  neces- 
sary to  modify  the  ideal  in  some  degree. 

a  V.  supra,  pp.  10,  n. 

8  The  principal  argument  in  support  of  workmen's  compensa- 
tion is  based  on  the  principle  of  fault  but  the  old  narrow  inter- 
pretation recognizing  only  personal  fault  has  been  superseded. 


THEORY  OF  WORKMEN'S  COMPENSATION    77 

termination^of  fault  in  the  remaining  cases  is  so  diffi- 
cult that  expediency  demands  the  extension  of  the 
principle  to  all  accidents.  Further,  an  industry  which 
is  not  able  to  bear  the  loss  occasioned  by  its  accidents 
and  which  exists  only  by  forcing  others  to  bear  the 
loss  is  parasitic  and  its  expenses  of  production  are  not 
a  true  measure  of  cost. 

2.  Any  workable  scheme  of  compensation  necessa- 
rily involves  medical  and  surgical  care  of  the  injured 
and  such  ca^^ults  in  a  net  gain  to  individual  indus- 
tries and  A  ft  .  Discarding  of  injured  workmen 
is  no  moreH  Bible  than  a  refusal  to  repair  damaged 


3.  Society  has  accepted  the  idea  that  the  needy  should 
be  cared  for  in  all  possible  cases.     Workmen's  com- 
pensation is  an  application  of  this  idea  to  a  specific 
problem.4 

4.  The     provision     in     workmen's     compensation 
laws  that  an  industry  shall  bear  the  burden  of  cost 
of  its  accidents  does  not  mean  that  the  burden  will  be 
ultimately  borne  by  the  employer  as  such.     It  does 
mean  that  the  expense  of  producing  any  particular  ar- 
ticle will  more  accurately  represent  its  real  cost  and 
that  the  selling  price  will  be  fixed  accordingly.     The 
loss  from  industrial  accidents  will  be  borne  by  the  con- 
sumer of  the  commodity  the  production  of  which  has 

4  It  should  be  recognized  that  compensation  according  to  need  is 
not  justified  by  the  argument  that  the  industry  is  responsible  for 
economic  loss.  For  example,  industry  is  responsible  for  the  cut- 
ting off  of  a  workman's  wages  through  accidental  death  but  is 
not  responsible  in  proportion  to  the  size  of  the  man's  family. 
Compensation  for  dependents  in  proportion  to  their  number  cp,n 
be  defended  only  on  grounds  of  expedience 


78  COMPENSATION  INSURANCE 

occasioned  it.  If  the  inclusion  of  this  item  in  the  cost 
of  production  makes  necessary  such  an  increase  that 
the  selling  price  becomes  prohibitive,  it  is  proved  that 
the  continued  existence  of  the  industry  is  justified  only 
on  grounds  which  would  warrant  governmental  aid. 
I  Conclusion. — Workmen's  compensation  is  only  one 
^aspect  of  the  gradual  systematizing  of  human  affairs. 
In  private  business  cost  accounting  has  succeeded  in 
allocating  many  expenses  formerly  regarded  as  gen- 
eral and  incapable  of  being  charged  to  specific  ac- 
counts. By  this  process  the  cost  of  conducting  each 
separate  department  of  a  business  becomes  known. 
Likewise  the  capacity  of  each  department  to  produce 
income  is  more  accurately  known  and  its  worth  is 
computed  by  a  comparison  of  income  and  expense. 

So  organized  society  may  be  regarded  as  a  huge 
business  of  which  the  various  industries  are  depart- 
ments. A  comparison  of  the  social  cost  of  maintain- 
ing an  industry  with  the  return  in  terms  of  social  wel- 
fare should  be  made  to  determine  its  net  worth,  bear- 
ing in  mind  that  the  apparent  costs  and  returns  in 
terms  of  money  are  not  a  final  measure  of  either  side 
/of  the  account.  The  enactment  and  operation  of  work- 
men's compensation  laws  enable  a  more  accurate  esti- 
mate of  the  cost  of  carrying  on  industry  and  are  an  aid 
to  a  more  equitable  judgment  of  its  net  social  worth. 

REFERENCES 

RUBINOW,  I.  M.    "Social  Insurance."    Holt  &  Co.,  New 

York  (1913).     Chapters  I,  VII,  and  XXIX. 
SEAGER,  H.  R.     ''Social  Insurance."     Macmillan,  New 
-  York   ( 1 9 ib;),.f    Chapters  I,  II,  and  III. 


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